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JSC NC KazMunayGas First Quarter of 2025 Trading Update

Fri, 16 May 2025 16:53:22 +0500

Joint-stock (JSC) National Company (NC) KazMunayGas (“KMG” or “Company”), Kazakhstan's national oil and gas company, announces its operating results for the first quarter of 2025.

Key operating highlights for the first quarter of 2025 compared to the first quarter of 2024:

Oil and gas condensate production increased by 5.8% and amounted to 6,416 thous. tonnes;
Oil transportation volumes decreased by 2.9% and amounted to 20,920 thous. tonnes;
Hydrocarbons refining volumes at the Kazakh and Romanian refineries increased by 11.1% and amounted to 5,137 thous. tonnes.

	1Q 2025 (net to KMG)	1Q 2024 (net to KMG)	%
Oil production, thous. tonnes	6,416	6,064	+5.8%
Gas production, mln m³	2,841	2,522	+12.7%
Oil transportation, thous. tonnes	20,920	21,541	-2.9%
Oil refining, thous. tonnes	5,137	4,626	+11.1%

Operating results are represented in accordance with KMG's ownership interest in joint ventures and associates and 100% of results for consolidated subsidiaries, unless otherwise stated. Indicators and calculation results are indicated with rounding. However, when comparing periods, exact values were used without rounding. Any possible adjustments related to rounding, in the Company's opinion, should not have a material effect on operating results.

Upstream

Oil and gas condensate production volume for the first quarter of 2025 amounted to 6,416 thous. tonnes (540 kbopd), representing an increase of 5.8%. Production volume of associated and natural gas raised by 12.7% to 2,841 mln m³.

Oil and condensate production, thous. tonnes	1Q 2025 (net to KMG)	1Q 2024 (net to KMG)	%
OMG	1,240	1,233	+0.6%
EMG	677	682	-0.7%
MMG	753	768	-1.8%
Other operating assets	816	812	+0.5%
Total operating assets	3,487	3,494	-0.2%
Tengiz	1,874	1,500	+24.9%
Kashagan	761	780	-2.5%
Karachaganak	296	291	+1.8%
Total megaprojects	2,930	2,571	+14.0%
Total	6,416	6,064	+5.8%

Production at Operating Assets

Oil production of OMG increased by 0.6% amounting to 1,240 thous. tonnes, while gas production increased by 3.9%, reaching 150 mln m³. Oil production of EMG decreased by 0.7%, amounting to 677 thous. tonnes, while gas production increased by 9.5%, reaching 56 mln m³. Oil production of MMG amounted to 753 thous. tonnes, while gas production increased by 3.5%, reaching 118 mln m³. The increase in gas production at operating assets is due to the commissioning of wells with an increased gas-to-oil ratio.

Production at Megaprojects

Oil production at Tengiz increased by 24.9% amounting to 1,874 thous. tonnes (166 kbopd). Associated gas production increased by 25.8%, reaching 1,055 mln m³. The growth is due to the start of production at the Third Generation Plant under the Future Growth Project (January 2025).

Oil production at Kashagan amounted to 761 thous. tonnes (67 kbopd), showing a decrease of 2.5%. Gas production decreased by 0.4% reaching 499 mln m³. The decrease in production is due to the increase in the gas content in oil.

Oil and condensate production at Karachaganak increased by 1.8% amounting to 296 thous. tonnes (26 kbopd). The increase is due to higher volumes of raw gas reinjection into the formation at the Karachaganak production facilities. At the same time, gas production prior to reinjection into the formation increased by 7.2%, reaching 684 million m³.

Oil transportation

The total volume of oil trunk pipelines and sea transportation decreased by 2.9% to 20,920 thous. tonnes.

Oil transportation1, thous. tonnes	1Q 2025 (100%)	1Q 2025 (net to KMG)	1Q 2024 (net to KMG)	%
KazTransOil	10,911	10,911	11,379	-4.1%
Kazakhstan-China Pipeline	4,847	2,424	2,384	+1.7%
MunaiTas²	1,479	754	751	+0.4%
Caspian Pipeline Consortium	17,849	3,704	3,568	+3.8%
Total trunk pipelines	-	17,792	18,081	-1.6%
The Caspian Sea	456	456	563	-19.0%
Open seas³	2,672	2,672	2,897	-7.8%
Total marine transportation	-	3,128	3,460	-9.6%
Total	-	20,920	21,541	-2.9%
¹ Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation. ² MunaiTas is an equity-consolidated joint venture and transportation volumes are quoted at a 51% ownership interest. ³ The open seas are the Mediterranean Sea and the Black Sea.

The volume of oil transportation via main pipelines decreased by 1.6%, reaching 17,792 thous. tonnes. The decrease in oil transportation volumes is due to a reduction in oil deliveries from the Kashagan field into the KTO system.

The volume of maritime oil transportation decreased by 9.6%, reaching 3,128 thous. tonnes. The main factor contributing to the decrease in transportation volumes in the Caspian Sea was the decommissioning of the “Taraz” tanker for scheduled modernization to install an inert gas system, as well as limited crude oil shipments from shippers during the winter period due to unfavorable weather conditions.

The decline in transportation volumes in the Open Seas is attributed to a change in CPC’s allocation plans for Aframax-type tankers starting from March 2025.

Oil turnover

Turnover, mln tonnes*km	1Q 2025 (100%)	1Q 2025 (net to KMG)	1Q 2024 (net to KMG)	%
KazTransOil	8,704	8,704	8,691	+0.1%
Kazakhstan-China Pipeline	4,336	2,168	2,122	+2.2%
MunaiTas²	635	324	308	+5.0%
Caspian Pipeline Consortium	24,316	5,046	4,547	+11.0%
Total	-	16,242	15,668	+3.7%

The oil throughput increased by 3.7% reaching 16,242 thous. tonnes. The increase is mainly due to higher oil deliveries from the Tengiz field into the CPC system.

Trading

Sales volumes of KMG's own produced oil and gas condensate increased by 3.4% and amounted to 6,333 thous. tonnes, of which 66,1% was exported.

Supplies of own produced oil and gas condensate volumes to cover the needs of the domestic market amounted to 2,147 thous. tonnes, including deliveries of crude oil from operating assets (Ozenmunaigas, Embamunaigas, Kazakhturkmunai and Urikhtau Operating) in the amount of 1,336 thous. tonnes to Atyrau, Pavlodar and Shymkent refineries for further oil refining and sales of oil products.

Downstream

Hydrocarbon refining, thous. tonnes¹	1Q 2025 (net to KMG)	1Q 2024 (net to KMG)	%
Atyrau refinery	1,423	1,426	-0.2%
Pavlodar refinery	1,545	1,477	+4.6%
Shymkent refinery	756	676	+11.9%
Caspi Bitum	0	43	-100.0%
Total Kazakhstan's refineries	3,724	3,622	+2.8%
Petromidia	1,338	943	+41.9%
Vega	75	61	+22.9%
Total KMG International	1,413	1,004	+40.7%
Total	5,137	4,626	+11.1%
¹Shymkent refinery and Caspi Bitum refining volumes are indicated at a share of 50%, other refineries — 100%.

The total volume of hydrocarbon refining increased by 11.1% compared to the first quarter of 2024 and amounted to 5,137 thous. tonnes:

The processing volume at Kazakh refineries increased by 2.8% and amounted to 3,724 thous. tonnes. The increase in the indicator is attributed to continuous processing at all Kazakhstani refineries in the first quarter of 2025, whereas during the same period in 2024, Shymkent refinery was undergoing major repairs. Additionally, during the reporting period, processing at the Caspi Bitum plant was suspended due to modernization aimed at increasing capacity to 1.5 million tons per year. Production resumed at the end of April of the current year.
The processing volume at KMG International refineries (Petromidia, Vega) in Romania increased by 40,7%, reaching 1 413 thous. tonnes. The significant increase in the indicator is explained by more stable operational activity during the reporting period, whereas in the first quarter of 2024, processing was limited due to the delayed start-up of the mild hydrocracking unit and major repairs at the refinery.

Oil Product Production

Oil Product Production, thous. tonnes		1Q 2025 (net to KMG)	1Q 2024 (net to KMG)	%
Kazakhstan's refineries	Gasoline	1,314	1,086	+21.0%
	Diesel	1,131	1,053	+7.4%
	Other	948	1,166	-18.7%
	Total	3,393	3,305	+2.7%
KMG International	Gasoline	400	273	+46.4%
	Diesel	534	459	+16.4%
	Other	431	290	+48.4%
	Total	1,364	1,022	+33.5%
Total	Gasoline	1,714	1,359	+26.1%
	Diesel	1,665	1,512	+10.1%
	Other	1,379	1,456	-5.3%
	Total	4,758	4,327	+10.0%

The volume of oil product production at Kazakh and Romanian refineries increased by 10.0% amounting to 4,758 thous. tonnes:

Kazakhstan refineries produced 3,393 thous. tonnes of oil products, which is 2.7% higher than the in the first quarter of 2024. The decrease in the output of other petroleum products is due to the reallocation of production capacity predominantly at Atyrau refinery towards the production of light petroleum products.
KMG International refineries (Petromidia, Vega) produced 33.5% more oil products, totaling 1,364 thous. tonnes, due to restored refining volumes at the plants.

Sales volume of KMG’s oil products produced in Kazakhstan, thous. tonnes

	1Q 2025			1Q 2024			%
	Dom. mkt.	Exp.	Total	Dom. mkt.	Exp.	Total	Dom. mkt.	Exp.	Total
Gasoline	502	-	502	407	-	407	+23.4%	-	+23.4%
Diesel	440	-	440	427	-	427	+2.9%	-	+2.9%
Other	338	119	457	388	200	589	-12.9%	-40.6%	-22.3%
Total	1,281	119	1,400	1,223	200	1,423	+4.7%	-40.6%	-1.7%

The volume of wholesale sales of KMG's own oil products decreased by 1.7%, reaching 1,400 thous. tonnes. The decrease in sales volumes of other petroleum products is due to the transfer of production capacities to the production of light petroleum products predominantly at the Atyrau refinery.

Polypropylene: production and sales

Production and sales of polypropylene, thous. tonnes	1Q 2025 (net to KMG)	1Q 2024 (net to KMG)	%
Production	47.7	28.2	69.1%
Sales:
Domestic	4.0	1.8	+122.3%
Export	40.7	27.9	+45.9%
Total sales	44.7	29.7	+50.5%

The volume of polypropylene production at the KPI plant increased by 69.1% and amounted to 47.7 thous. tonnes. The increase is due to a gradual increase in the number of grades produced, from 2 grades in the first quarter of 2024 to 10 grades in the reporting quarter, and the gradual reaching of the plant's production capacity.

The total volume of polypropylene sales increased by 50.5% compared to the same period in 2024 and amounted to 44.7 thous. tonnes:

The volume of polypropylene sales to the domestic market increased by 122.3% and amounted to 4.0 thous. tonnes.
The volume of polypropylene export increased by 45.9% and amounted to 40.7 thous. tonnes, the increase in supplies occurred mainly in the direction of Turkey and Russia.

For further information, please visit https://www.kmg.kz/en/investors/reporting/

Contacts: ir@kmg.kz, Tel: +7 7172 78 64 34

About JSC National Company KazMunayGas:

JSC National Company KazMunayGas (KMG) is Kazakhstan's leading vertically integrated oil and gas company, operating assets across the entire production cycle from the exploration and production of hydrocarbons to transportation, refining and specialized services. Established in 2002, the company represents Kazakhstan’s interests in the national oil and gas industry.

KMG’s main assets are as follows:

Upstream: Ozenmunaigas (OMG) — 100%, Embamunaigas (EMG) — 100%, KazakhTurkmunai (KTM) — 100%, KazMunayTeniz — 100%, Urikhtau (UO) — 100%, Dunga — 60%, Ural Oil and Gas (UOG) — 50%, Mangistaumunaigaz (MMG) — 50%, Kazgermunai (KGM) — 50%, Karazhanbasmunai (KBM) — 50%, KazakhOil Aktobe (KOA) — 50%, PetroKazakhstan Inc (PKI) — 33%, Tengizchevroil (Tengiz) — 20%, Karachaganak — 10%, Kashagan — 16.88%.
Midstream: KazTransOil — 90%, Kazakhstan China Pipeline (KCP) — 50%, Munai Tas — 51%, Batumi Oil Terminal — 100%, Caspian Pipeline Consortium (CPC) — 20.75%, Kazmortransflot — 100%.
Downstream: Pavlodar refinery — 100%, Atyrau refinery — 99,53%, Shymkent refinery — 49,72%, Caspi Bitum — 50%, KMG International — 100%, Petromidia — 54,63%, Vega — 54,63%, KazRosGas — 50%, Kazakhstan Petrochemical Industries Inc — 49.5%, Silleno — 40%.

JSC NC «KazMunayGas» published its 2024 Annual Report

Wed, 30 Apr 2025 19:27:00 +0500

The Annual Report presents the key performance indicators of the KazMunayGas Group, information on significant corporate events, consolidated operational and financial results, as well as the Company’s sustainability performance for 2024.

The Report has been prepared in accordance with regulatory requirements and in line with international standards and applicable global best practices for disclosure.

The full report is available on the Company’s website in the «Investors» section: www.kmg.kz

KMG's Head Meets with Chair of Chevron's Board of Directors

Tue, 15 Apr 2025 16:22:06 +0500

KazMunayGas and Chevron discussed joint projects and prospects for cooperation. Chair of the Management Board of NC KazMunayGas JSC Askhat Khassenov met with Chair of Chevron's Board of Directors Michael Wirth.

The matters of development of the Tengiz and Karachaganak fields and prospects for cooperation in geologic exploration were discussed.

In particular, the successful completion of the Future Growth Project at Tengiz was noted, which became a significant step in ensuring the nation’s energy security and sustainability.

KMG's head pointed out the need for timely maintenance and upgrade of the production facilities to maintain a high level of industrial safety. Moreover, A. Khassenov emphasized the importance of further localization of the Kazakh production facilities for Tengiz's needs in order to develop the industrial cluster.

The need to increase the share of Kazakh personnel among the management staff of Tengizchevroil LLP (TCO) was also noted at the meeting. Today, domestic specialists working in TCO have completed internships abroad and gained the relevant qualifications and necessary experience to hold senior and managerial positions in the company.

On the Karachaganak project, the parties discussed the progress of the initiative to build a new gas processing plant at the field with a capacity of 4.5 billion m³ of raw gas. A. Khassenov thanked Chevron for supporting the development of the country’s petrochemical industry.

“KazMunayGas highly appreciates the strategic partnership with Chevron and we intend to strengthen mutually beneficial cooperation in order to implement joint promising industrial projects,” KMG's head emphasized.

KMG has reached an agreement with TR to start training Kazakh students in engineering in Spain

Mon, 07 Apr 2025 16:00:18 +0500

Tecnicas Reunidas (TR), a Spanish company, is launching a new program to attract talented Kazakh specialists in the fields of engineering and project management.

TR has been awarded as one of the EPC contractors for the pyrolysis unit of the future polyethylene plant "Silleno" in the Atyrau region, with the foundation of the plant having been laid in March 2025.

The program for advancing the qualifications of talented Kazakh youth in engineering was developed by Tecnicas Reunidas in partnership with KazMunayGas. Domestic specialized universities are also actively involved in the implementation of this initiative.

The program aims to train 120 graduates from Kazakh universities in engineering specialties in Spain, followed by employment in TR projects worldwide.

The program is designed for 4 years and will start in the second quarter of 2025. Each year, 30 graduates will be selected. The program duration is 6 months: 3 months of online learning and 3 months of practical work at TR’s office in Madrid in relevant fields.

The first round of candidate selection will take place between April and June 2025. The program is fully funded by TR.

Tecnicas Reunidas is a Spanish engineering company with 60 years of experience in implementing over a thousand industrial projects worldwide. The company’s branches are located in 25 countries

Kazakhstan’s largest petrochemical project: first piles driven for polyethylene plant in Atyrau

Mon, 31 Mar 2025 12:20:26 +0500

On March 31, 2025, the first piles were driven into the foundation of the future Silleno polyethylene plant within the Special Economic Zone "National Industrial Oil and Gas Chemical Technopark" in Atyrau region.

The grand construction project was launched by Serik Shapkenov, akim of Atyrau region, Askhаt Khasenov, Chairman of the Board of JSC NC "KazMunayGas" (KMG), Kudaibergen Arymbek, Vice Minister of Energy of Kazakhstan, Pavel Lyakhovich, Member of the Management Board and Managing Director of SIBUR, and Wan Tao, Senior Vice President of Sinopec.

The construction of the plant, which has a capacity of 1.25 million tons of polyethylene per year and an investment of approximately 7 billion US dollars, is expected to be completed by 2028, with production set to begin in 2029. Silleno will become one of the largest projects in Kazakhstan's manufacturing industry.

The plant will be capable of producing over 20 different grades of polyethylene used in key industrial sectors.

The project will have a multiplicative positive effect on the national economy starting from the construction phase and will contribute to the growth of Kazakhstan's non-resource exports. Silleno products will play a vital role in substituting polyethylene imports, allowing for the replacement of about 90% of the imported range. According to the data of the Bureau of National Statistics of the RK, in 2024, the polyethylene market in Kazakhstan was approximately 300 thousand tons, and experts estimate it could grow to 400 thousand tons by 2035. Most of the polyethylene demand from Kazakh consumers will be met by Silleno supplies.

The plant’s launch will create around 8,000 jobs during the construction phase and 800 jobs after production begins.

The ethane feedstock for polyethylene production will be extracted at the KMG Gas Separation Complex from gas fields operated by Tengizchevroil and delivered to Silleno via a main pipeline, which will also be constructed by KMG.

The future complex will include the construction of a steam cracker for ethylene production using Lummus Technology (USA), ethylene polymerization units based on Chevron Phillips Chemical (USA) and Univation Technologies (USA) technologies, as well as a butene unit utilizing Axens technology (France).

The technological solutions from global leaders in the petrochemical industry will ensure the safety of the new production, guaranteeing not only high reliability but also minimal environmental impact.

The first preparatory work at the site began with the steam cracker, for which the EPC contractor is Tecnicas Reunidas (Spain) in consortium with Sinopec Engineering Incorporation (China).

Reference:

The project is being implemented by Silleno, with shareholders including JSC NC "KazMunayGas" (40%), Sinopec Overseas Investment Holding (30%), and PJSC "SIBUR Holding" (30%).

The plant will not only meet Kazakhstan's internal polyethylene demand but also plans to supply products to the CIS countries, Europe, China, and Turkey.

Polyethylene is a vital raw material for manufacturing a wide variety of products, including pipes and valves for water and gas supply systems, sewage, ventilation, heating, electrical insulation, and thermal insulation materials. It is also used in the production of hulls for boats and all-terrain vehicles, parts for technical equipment, household appliances, medical equipment, automotive components, toys, films of all types, packaging (such as bottles, crates, canisters, etc.), and other products in demand both in daily life and across industrial sectors.

Invitation to FY 2024 Financial and Operational Results Update Call

Thu, 20 Mar 2025 20:52:07 +0500

JSC NC KazMunayGas (“the Company”) invites you to participate in a conference call on operating and financial results for 2024, which will be held on 26 March 2025 at 04:00 pm Astana time / 11:00 am GMT / 07:00 am EDT.

The results for the reporting period will be presented by the Company's management.

Please complete the registration form using the link to participate in the call:

https://us06web.zoom.us/webinar/register/WN_RoZMN52iSsCpDyq8wyoKvg#/registration

Dial-in details will be sent to you by e-mail after the registration.

A registered participant can connect only from one device. If you need to change your device during the call, you should log out and log in from new device.

The presentation of the call will be followed by a Q&A session.

2024 consolidated financial statements and press release are available on the Company's website:

https://www.kmg.kz/en/investors/reporting/

The presentation will be available on the day of the call on the Company's website

For questions, please contact the Investor Relations Team at tel. +7 (7172) 78 64 34, e-mail ir@kmg.kz

About the Company:

National Company KazMunayGas is Kazakhstan's national operator for exploration, production, refining and transportation of hydrocarbons, representing the State in Kazakhstan's petroleum sector.

JSC NC KazMunayGas announces 2024 FY financial results

Thu, 20 Mar 2025 19:52:20 +0500

Joint-stock National Company KazMunayGas (“KMG” or Company), Kazakhstan's national oil and gas company, published its consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) for 2024 with an independent auditor's report.

Key financial indicators for 2024^[1] compared to 2023:

Revenue amounted to 8,330 bln tenge (USD 17,750 mln) compared to 8,320 bln tenge (USD 18,236 mln);
EBITDA amounted to 2,001 bln tenge (USD 4,264 mln) compared to 2,007 bln tenge (4,398 mln);
The Company's net profit including share in income of joint ventures and associates amounted to 1 094 bln tenge (USD 2,332 mln) compared to 927 bln tenge (USD 2,031 mln);
Net profit adjusted for share in profit of joint ventures and associates^[2] amounted to 1,264 bln tenge (USD 2,694 mln) compared to 1,012 bln tenge (USD 2,219 mln);
Free cash flow amounted to 1,199 bln tenge (USD 2,555 mln) compared to 984 bln tenge (USD 2,157 mln);
Gross debt as of 31 December 2024 amounted to 3,967 bln tenge (USD 7,555 mln) compared to 3,757 bln tenge (USD 8,265 mln) as of 31 December 2023;
The Company's net debt as of 31 December 2024 was at 1,163 bln tenge (USD 2,214 mln) compared to 1,645 bln tenge (USD 3,620 mln) as of 31 December 2023.

Indicators	UoM	2024	2023^[3]	%
Dated Brent^[4], average	$/bbl	80.76	82.64	-2.3%
Dated Urals^[4], average	$/bbl	70.76	64.69	9.4%
KEBCO^[4], average	$/bbl	80.73	81.74	-1.2%
Exchange rate, average	KZT/USD	469.31	456.21	2.9%
Revenue	bln tenge	8,330	8,320	0.1%
Share in profit of JVs and associates, net	bln tenge	531	534	-0.6%
Dividends received from JVs and associates, net	bln tenge	701	620	13.1%
Net profit	bln tenge	1 094	927	18.1%
Net profit adjusted for the share in profit of JVs and associates	bln tenge	1,264	1,012	24.9%
EBITDA^[5]	bln tenge	2,001	2,007	-0.3%
Adjusted EBITDA^[6]	bln tenge	2,171	2,092	3.8%
CAPEX (accrual basis)	bln tenge	716	804	-10.9%
CAPEX (cash basis)	bln tenge	645	683	-5.7%
Free cash flow^[7]	bln tenge	1,199	984	21.8%
Gross debt^[8]	bln tenge	3,967	3,757	5.6%
Net debt^[9]	bln tenge	1,163	1,645	-29.3%

Operating results for 2024^[10] compared to 2023:

Proven and probable hydrocarbon reserves (2P) of KMG decreased by 2.4%, amounting to 716 mln tonnes of oil equivalent (toe);
Oil and gas condensate production increased by 1.3%, reaching 23,837 thous. tonnes;
Oil transportation volume rose by 3.9%, totaling 83,478 thous. tonnes;
Hydrocarbons refining volumes at Kazakh and Romanian refineries amounted to 19,158 thous. tonnes, compared to 19,593 thous. tonnes in the previous period.

	2024 (net to KMG)	2023 (net to KMG)	%
Oil production, thous. tonnes	23,837	23,532	+1.3%
Gas production, mln m³	9,554	9,459	+1.0%
Oil transportation, thous. tonnes	83,478	80,359	+3.9%
Oil refining, thous. tonnes	19,158	19,593	-2.2%

Financial Highlights for 2024

Revenue

In 2024, revenue amounted to 8,330 bln tenge (USD 17,750 mln), reflecting a 0.1% increase compared to 2023. Stable revenue dynamics are driven by several factors, including an increase in crude oil production and transportation volumes. This offset the impact of lower crude oil sales from Kashagan due to maintenance work on raw gas injection compressors and the replacement of the slug catcher, as well as the decline in sales of refined products at KMG International due to the major overhaul at the Petromidia refinery.

Share in profit of joint ventures and associates

The share in profit of joint ventures and associates decreased by 0.6% and amounted to 531 bln tenge (USD 1,132 mln) mainly due to a decline in profit of Tengizchevroil LLP. The share in profit of Tengizchevroil LLP declined by 37 bln tenge (USD 80 mln) to 303 bln tenge (USD 647 mln) due to higher depreciation expenses following the commissioning of facilities under the Wellhead Pressure Management Project. Additionally, the share in profit of KazRosGas LLP declined by 40.7% to 19 bln tenge (USD 41 mln) due to lower gas sales prices, while the share of profit in Mangistaumunaigas JSC decreased by 6.6% to 36 bln tenge (USD 76 mln) due to lower export oil sales volumes.

EBITDA

In 2024, EBITDA amounted to 2,001 bln tenge (USD 4,264 mln), implying a 0.3% decrease. The dynamics of this indicator were influenced by both positive factors, including the increase in the average USDKZT exchange rate from 456.21 to 469.31 and the consolidation of Dunga, as well as negative factors, such as higher costs for production-related services and an increase in payroll expenses.

Adjusted EBITDA

The adjusted EBITDA, which reflects dividends received from joint ventures and associates instead of the share of profit of joint ventures and associates, amounted to 2,171 bln tenge (USD 4,626 mln), reflecting a 3.8% increase.

Net profit

The Company's net profit rose by 18.1% compared to 2023, reaching 1,094 bln tenge (USD 2,332 mln). The profit growth was driven by foreign exchange gain, other finance income, and lower Impairment of property, plant and equipment, intangible assets, non–current advances for fixed assets and exploration expenses. The recognition of a change in the fair value of a financial instrument due to its modification^[11] and the derecognition of loan^[12] impacted other finance income.

Net profit adjusted for share in profit of JVs and associates

The net profit, adjusted for the share in profit of joint ventures and associates, increased by 24.9%, from 1,012 bln tenge (USD 2,219 mln) to 1,264 bln tenge (USD 2,694 mln).

Cost of purchased oil, gas, petroleum products and other materials

The cost of purchased oil, gas, petroleum products and other materials decreased by 5.9% in the reporting period, reaching 4,347 bln tenge (USD 9,263 mln) primarily due to lower oil prices.

Operating expenses

Production expenses increased by 14.7%, reaching 1,399 bln tenge (USD 2,980 mln), primarily due to increased payroll for production personnel in the region of operation (Ozenmunaigas JSC, KazTransOil JSC, Embamunaigas JSC, and Pavlodar refinery). Additionally, the increase was driven by higher expenses for production-related services, variable costs related to internal logistics, and changes in finished goods and work-in-progress.

Transportation and selling expenses for the reporting period amounted to 268 bln tenge (USD 571 mln), representing a 9.1% increase compared to 2023. This growth was driven by higher loading, transportation, and storage costs at KMG International, and KazMunayGas-Aero LLP.

General and administrative expenses increased by 53.2% to 254 bln tenge (USD 542 mln). The increase was primarily driven by the accrual of remuneration to NC "QazaqGaz" JSC, a subsidiary of Samruk-Kazyna JSC, for trust management services of a 50% stake in KazRosGas LLP, amounting to 53.3 bln tenge (USD 114 mln). Additionally, the increase was impacted by sponsorship assistance provided to flood victims through the Foundation for development of social projects "Samruk-Kazyna Trust", totaling 10.0 bln tenge in April-May 2024.

Taxes other than income tax amounted to 593 bln tenge (USD 1,264 mln). In 2024, KMG International paid a turnover tax of EUR 28.5 mln (equivalent to 14 bln tenge or USD 31 mln) in accordance with Romania’s Law No. 296/2023^[13].

Impairment of Property, Plant, and Equipment and Intangible Assets

In 2024, impairment of property, plant and equipment, intangible assets, non–current advances for fixed assets and exploration expenses amounted to 70 bln tenge (USD 149 mln). Impairment of long-term assets totaled 48 bln tenge (USD 102 mln), primarily related to the impairment of the seawater desalination plant and associated infrastructure in Zhanaozen. Impairment of exploration and evaluation assets amounted to 22 bln tenge (USD 46 mln), mainly driven by the Abai project, which accounted for 18 bln tenge (USD 38 mln).

Capital expenditures

Accrual-based capital expenditures totaled 716 bln tenge (USD 1,526 mln), reflecting a 10.9% decrease, primarily due to lower capital expenditures at KazTransOil JSC following the completion of the reconstruction and expansion of the Astrakhan-Mangyshlak main water pipeline.

Cash flow-based capital expenditures totaled 645 bln tenge (USD 1,374 mln), reflecting a 5.7% decrease. The reduction in capital expenditures on property, plant, and equipment, intangible assets, and exploration and evaluation assets was mainly driven by lower expenditures on the acquisition of exploration and evaluation assets at the Corporate Centre level and reduced spending on property, plant, and equipment at KazTransOil JSC.

Dividends Received from Joint Ventures and Associates

Dividends received from joint ventures and associates amounted to 701 bln tenge (USD 1,494 mln), having increased by 13.1% compared to 2023. The increase in dividends was primarily driven by a dividend payment from MMG totaling 45 bln tenge (USD 95 mln) in 2024, as well as a significant increase in dividends from KazRosGaz LLP, which rose to 53 bln tenge (USD 114 mln) in 2024, compared to 553 mln tenge (USD 1 mln) in 2023. Additionally, dividend payments from PKI increased by 15 bln tenge (USD 32 mln), reaching 18 bln tenge (USD 38 mln).

Free cash flow

Free cash flow increased by 21.8% compared to 2023, reaching 1,199 bln tenge (USD 2,555 mln). This growth was driven by higher net cash flows from operating activities, including an increase in dividends received from joint ventures and associates, as well as lower capital expenditures.

Debt management

Debt indicators

Indicators	UoM	31 December 2024	31 December 2023	%
Bonds	bln tenge	3,288	3,046	7.9%
Loans	bln tenge	679	711	-4.4%
Gross debt	bln tenge	3,967	3,757	5.6%

Numbers may not add up due to a rounding.

KMG's total debt is primarily denominated in U.S. dollars (75% as of 31 December 2024). During the reporting period, the Company reduced debt in U.S. dollar terms by 8.6% to USD 7,555 mln compared to 31 December 2023. In tenge terms, total debt amounted to 3,967 bln tenge, reflecting a 5.6% increase from 31 December 2023. This growth in tenge was driven by exchange rate fluctuations during the reporting period, as well as an increase in the coupon rate from 3% to 9.3% on bonds issued by KMG to Samruk-Kazyna JSC in 2022.

On 12 September 2024, the Company made a partial early redemption of its 2027-maturity bonds in the amount of USD 750 mln (equivalent to 358 bln tenge).

Loans decreased by 4.4% to 679 bln tenge (USD 1,294 mln) as of 31 December 2024, reflecting the partial repayment of loans by Atyrau Refinery, Pavlodar Refinery, and KMG International. KMG International partially repaid a syndicated loan for the amount of USD 72 mln (equivalent to 34 bln tenge). KMG International repaid a loan from ING Bank NV for the amount of USD 29 mln (equivalent to 14 bln tenge). Atyrau Refinery and Pavlodar Refinery partially repaid a loan from the Development Bank of Kazakhstan for the amount of 47 bln tenge. Atyrau Refinery and KazTransOil JSC partially repaid a loan from Halyk Bank of Kazakhstan JSC for the amount of 21 bln tenge.

In 2024, KMG International, under existing credit lines, obtained a loan from Bank of Tokyo-Mitsubishi UFJ, Ltd. totaling USD 36 mln (equivalent to 17 bln tenge) for working capital funding. In 2024, KazGPZ LLP received the first tranche from Halyk Bank of Kazakhstan JSC totaling KZT 48 bln as part of a credit line agreement signed in 2022 for the construction of a Gas Processing Plant.

In 2024, following a notification from the Ministry of Energy of the Republic of Kazakhstan regarding the termination of the subsoil use contract for the Zhenis project, the Company ceased recognition of the loan received from Lukoil Kazakhstan Upstream (carry financing) in the amount of 48 bln tenge.

Net debt

As of 31 December 2024, net debt amounted to 1,163 bln tenge (USD 2,214 mln), representing a 29.3% decrease in tenge terms and a 38.8% decrease in U.S. dollar terms compared to 31 December 2023.

Cash and cash equivalents

Consolidated cash and cash equivalents including deposits

Name of the indicator	UoM	31 December 2024	31 December 2023	%
Cash and cash equivalents	bln tenge	1,216	1,051	15.8%
Long-term deposits	bln tenge	74	64	16.3%
Short-term deposits	bln tenge	1,514	997	51.8%
Cash and cash equivalents including deposits	bln tenge	2,805	2,112	32.8%

Numbers may not add up due to a rounding.

As of 31 December 2024, consolidated cash and cash equivalents, including cash held in deposits, increased by 32.8% compared to 31 December 2023, reaching 2,805 bln tenge. In U.S. dollar terms, the amount was at USD 5,341 mln, having increased by 15.0% compared to 31 December 2023.

Key corporate events in 2024:

On 18 January 2024, in Rome, Italy, KMG and Eni S.p.A. signed the Joint Confirmation Agreement on initiation of the Zhanaozen hybrid power plant construction project. The project provides for construction of wind power plant (77 MW) and solar power plant (50 MW) in collaboration with Eni’s subsidiary Plenitude, as well as 120 MW gas power plant in Zhanaozen.
On 21 February 2024, KMG and Tatneft signed a purchase and sale agreement for 50% shares of Karaton Operating Ltd, a shareholder’s agreement and a financing agreement for the Karaton Subsalt project.
On 11 March 2024, KMG and SOCAR signed the Agreement on phased increase in the volumes of Kazakh oil transit across the territory of the Azerbaijan Republic and the Memorandum of Strategic Cooperation in Sale and Purchase of the Kazakh Oil.
On 29 March 2024, legal procedures related to Sinopec’s entry into the project for the construction of a polyethylene plant with a capacity of 1.25 mln tonnes in the Atyrau region was completed, thus, the share of participants in the project: KMG — 40% (consolidated), SIBUR — 30%, Sinopec — 30%.
On 28 May 2024, following the results of the annual General Meeting of Shareholders of JSC NC KazMunayGas, Askhat Galimovich Khasenov was appointed Chairman of the KMG Management Board. As of November 2024, the Management Board of KMG consists of 10 people (Khassenov A.G. — Chairman of the Management Board, Iskaziyev K.O., Abdulgafarov D.Ye., Zakirov B.K., Lavrenov V.S., Magauov A.M., Aryssova, D.A., Brekeshev S.A., Abaiyildanov B.K. and Balykbayev R.A.)
On 20 June 2024, the international rating agency Fitch affirmed KMG’s long-term credit rating at "BBB" with a "Stable" outlook.
On 26 June 2024, KMG completed the payment of dividends to shareholders for 2023. The total amount of dividends was at 300 bln tenge. The dividends per common share amounted to 491.71 tenge.
On 16 July 2024, a ceremony was held to mark the start of construction of a future 247 MW hybrid power plant in Zhanaozen. The hybrid project involves the combined generation of electricity from renewable energy sources (wind and solar). The capacity of the solar power plant will be 50 MW, wind power - 77 MW, and gas power - 120 MW.
On 11 September 2024, early construction work began in the Atyrau region on a polyethylene production plant with a capacity of 1.25 million tons per year and an investment volume of about USD 7.4 bln.
On 11 September 2024, the international rating agency Moody's Ratings upgraded KMG's credit rating from "Baa2" to "Baa1", the outlook was changed to “Stable”. KMG's rating is equal to the sovereign rating of the Republic of Kazakhstan.
On 12 September 2024, KMG made a partial early repayment of Notes in the amount of USD 750 mln. Savings in coupon payments based on the results of partial early redemption will amount to USD 92.7 mln. Early repayment was made based on the results of voting by bondholders on the public offering of KMG.
On 14 October 2024, Atyrau Refinery and the European Bank for Reconstruction and Development signed a loan agreement in the amount of 26.6 bln tenge for a period of 3.5 years under the guarantee of KMG. The loan funds were used to refinance the tenge loan from Halyk Bank of Kazakhstan JSC.
On 22 October 2024, KMG and China National Offshore Oil Corporation (CNOOC) signed the main terms of cooperation on the new ”Zhylyoi” subsoil project.
On 12 November 2024, on the sidelines of the 29th Conference of the Parties to the UN Framework Convention on Climate Change (COP-29), KMG and the State Oil Company of the Republic of Azerbaijan (SOCAR) signed a strategic agreement on decarbonization.
On 23 November 2024, KMG and Tatneft PJSC commenced drilling the first exploratory well, with a depth of 5,500 meters, at the Karaton Subsalt site in the Atyrau region.
On 11 December 2024, KMG PetroChem LLP (a subsidiary of KMG) and Tengizchevroil LLP signed an updated dry gas purchase and sale agreement, providing enhanced guarantees for raw material supply.
On 8 January 2025, Embamunaigas JSC commenced drilling the first exploratory well at the Taisoigan site in the Atyrau region.
On 24 January 2025, Tengizchevroil LLP completed a key milestone in the Future Growth Project — the start of crude oil production at the new Third Generation Plant (3GP) at the Tengiz field.

Indicators and calculation results are indicated with rounding. However, when comparing periods, exact values were used without rounding. Any possible adjustments related to rounding, in the Company's opinion, should not have a material effect on financial results.

For further information, please visit https://www.kmg.kz/en/investors/reporting

Contacts: ir@kmg.kz, Tel: +7 (7172) 78 64 34

About JSC National Company KazMunayGas:

JSC National Company KazMunayGas is Kazakhstan's leading vertically integrated oil and gas company, operating assets across the entire production cycle from the exploration and production of hydrocarbons to transportation, refining and specialised services. Established in 2002, the Company represents the government’s interests in the national oil and gas industry.

KMG’s main assets are as follows:

Upstream: Ozenmunaigas (OMG) — 100%, Embamunaigas (EMG) — 100%, KazakhTurkmunai (KTM) –100%, KazMunayTeniz — 100%, Urikhtau (UO) — 100%, Dunga — 60%, Ural Oil and Gas (UOG) — 50%, Mangistaumunaigaz (MMG) — 50%, Kazgermunai (KGM) — 50%, Karazhanbasmunai (KBM) — 50%, KazakhOil Aktobe (KOA) — 50%, PetroKazakhstan Inc (PKI) — 33%, Tengizchevroil (Tengiz) — 20%, Karachaganak — 10%, Kashagan — 16.88%.
Midstream: KazTransOil — 90%, Kazakhstan China Pipeline (KCP) — 50%, Munai Tas — 51%, Batumi Oil Terminal — 100%, Caspian Pipeline Consortium (CPC) — 20.75%, Kazmortransflot — 100%.
Downstream: Pavlodar refinery — 100%, Atyrau refinery — 99,53%, Shymkent refinery — 49,72%, Caspi Bitum — 50%, KMG International — 100%, Petromidia — 54,63%, Vega — 54,63%, KazRosGas — 50%, Kazakhstan Petrochemical Industries Inc — 49.5%, Silleno — 40%.

^[1] The amounts were converted to US dollars for user convenience at average exchange rates for respective periods (average USDKZT for 2024 and 2023 were at 469.31 and 456.21 respectively; end-of-period USDKZT as of 31 December 2024 and 31 December 2023 were at 525.11 and 454.56 respectively).

^[2] Net profit adjusted for share in profit of joint ventures and associates = Net profit plus dividends received from joint ventures and associates, minus share in profit of joint ventures and associates.

^[3] KMG has completed the fair value assessment of the net identifiable assets and liabilities of Dunga Operating GmbH at the date of acquisition, finalizing the initial accounting for the business combination. The fair value of Dunga Operating GmbH’s net identifiable assets and liabilities amounted to 156 bln tenge at the acquisition date, a decrease of 10 bln tenge over the provisional value. As a result, depreciation of property, plant, and equipment and corporate income tax from the acquisition date to 31 December 2023, were reduced by 2 bln tenge and 566 mln tenge, respectively. Comparative information for 2023 has been restated to reflect these adjustments.

^[4] Source: S&P Global Platts.

^[5] EBITDA = Revenue plus Share in profit of JVs and associates, net, minus Cost of purchased oil, gas petroleum products and refining costs minus Production expenses minus General and administrative expenses minus Transportation and Selling expenses minus Taxes other than income tax.

^[6] Adjusted EBITDA = Revenue plus Dividends from JVs and associates, minus Cost of purchased oil, gas petroleum products and refining costs minus Production expenses minus General and administrative expenses minus Transportation and selling expenses minus Taxes other than income tax.

^[7] Free Cash Flow = Net cash flow from operating activities minus Purchase of property, plant and equipment, intangible assets, investment property and exploration and evaluation assets. Dividends received from JVs and associates are included in cash flow from operating activities.

^[8] Total debt at the end of the reporting period = bonds plus loans (short-term and long-term). Guarantees issued are not included in the calculation.

^[9] Net debt at the end of the reporting period = bonds plus loans minus cash and cash equivalents minus bank deposits (short-term and long-term). Guarantees issued are not included in the calculation.

^[10] Production results are reported based on KMG's equity interest in joint ventures and associates, while fully consolidated subsidiaries are presented at 100%. For further details, please refer to the 2024 production results press release available at the following link: https://www.kmg.kz/en/investors/reporting

^[11] In 2024, the coupon rate on bonds purchased by Samruk-Kazyna JSC in 2022 was increased from 3.00% to 9.30%, resulting in a significant modification. The difference between the carrying value and the fair value of the bond derecognized at the date of modification was recognized within finance income.

^[12] In 2024, following a notification from the Ministry of Energy of the Republic of Kazakhstan regarding the termination of the subsoil use contract for the Zhenis project, the Company ceased recognition of the loan received from Lukoil Kazakhstan Upstream (carry financing) in the amount of 48 billion tenge.

^[13] The companies in the oil & gas sector with turnover of more than EUR 50 mln will have to pay an additional 0.5% turnover tax to the corporate income tax for 2024-2025.

KazMunayGas and LanzaJet Discuss the Sustainable Aviation Fuel Project in Kazakhstan

Wed, 12 Mar 2025 11:16:23 +0500

As part of the working visit to the United States, Askhat Khassenov, Chair of the Management Board of NC KazMunayGas JSC (KMG), met with Jimmy Samartzis, CEO of the American technology company LanzaJet.

The parties discussed the matters of further development of bilateral cooperation aimed at creating production of sustainable aviation fuel (SAF) in our country.

During the conversation, A. Khasenov noted that the partnership with LanzaJet opens up prospects for the development of sustainable energy solutions. Implementation of low-carbon alternative fuel production technologies is important for Kazakhstan.

KMG’s head expressed appreciation to Mr. Samartzis for LanzaJet's interest in the sustainable aviation fuel plant construction project in Kazakhstan. The parties confirmed their readiness to accelerate the development of the project feasibility study (FS).

— Our collaboration will make a substantial contribution to achieving low-carbon development goals and introduce the latest technologies, and will help KMG reduce emissions by 15% by 2031 against the 2019 level. In general, the project will have a serious impact on the development of the biofuel market and transit opportunities in Kazakhstan, noted A. Khassenov.

The pre-feasibility study development stage was completed earlier. The FS is expected to be completed this year

For reference:

LanzaJet is known for developing certified technology for producing SAF from ethanol (alcohol-to-jet). The company has long-term SAF supply agreements with major airlines, including All Nippon Airways, British Airways and Virgin Atlantic. LanzaJet's alcohol-to-jet technology can use ethanol obtained from any bio- or non-bio-based feedstock, considerablyreducing greenhouse gas emissions (up to 95%) and enhancing energy efficiency.

KazMunayGas and Solomon Associates Deepen Strategic Partnership to Enhance the Performance of Kazakhstan's Refineries

Mon, 10 Mar 2025 19:33:09 +0500

As part of the working visit to the United States, Askhat Khassenov, Chair of the Management Board of NC KazMunayGas JSC (KMG), met with Charles Wright, President of the American company Solomon Associates.

The parties considered the prospects for developing bilateral cooperation, paying particular attention to enhancing the performance of domestic refineries. The matters of long-term participation of Kazakh enterprises in Solomon benchmarking studies, which make it possible to conduct an independent assessment of their competitiveness, were discussed.

Moreover, significant attention was paid to Performance Excellence Process (PEP) projects. Since 2020, as part of its cooperation with KMG, the American company has proposed 109 recommendations for implementation for the Atyrau Refinery (AR LLP), Pavlodar Oil Chemistry Refinery (POCR LLP) and Shymkent Refinery (PKOP LLP).

The implementation of these recommendations from Solomon showed a significant economic effect: in AR and POCR it exceeded the investment in the research project by 2–5 times, and at Rompetrol Petromidia it reached $306 million over 7 years.

KMG also expressed interest in conducting TAR (Turnaround) benchmarking in AR and POCR as part of the transition to a three-year turnaround time, and in new research projects in AR, Rompetrol Petromidia and CaspiBitum.

— KazMunayGas and Solomon Associates have a strong partnership and considerable achievements based on the implementation of best world practices in oil refining. We intend to further develop cooperation, using the best solutions to enhance the performance of our enterprises, — A. Khasenov emphasized.

In its turn, Solomon Associates President Charles Wright confirmed the company's commitment to further cooperation and noted the substantial potential of Kazakh oil refineries in enhancing operating performance and competitiveness.

For reference: Solomon Associates, founded over 40 years ago, is a global leader in consulting for the oil and gas industry. Solomon's methodology is the industry standard. The studies cover 85% of the world's oil refining capacity (about 350 refineries), and in the CIS - more than 70-75% of the refining capacity.

JSC NC KazMunayGas 2024 Trading Update

Fri, 28 Feb 2025 17:52:56 +0500

National Company KazMunayGas JSC (“KMG” or “Company”), Kazakhstan's national oil and gas company, announces its operating results for 2024.

Key operating highlights of 2024 compared to 2023:

Proven and probable hydrocarbon reserves (2P) of KMG decreased by 2.4%, amounting to 716 mln tonnes of oil equivalent (toe);
Oil and gas condensate production increased by 1.3%, reaching 23,837 thous. tonnes;
Oil transportation volume rose by 3.9%, totaling 83,478 thous. tonnes;
Hydrocarbons refining volumes at Kazakh and Romanian refineries amounted to 19,158 thous. tonnes, compared to 19,593 thous. tonnes in the previous period.

	2024 (net to KMG)	2023 (net to KMG)	%
Oil production, thous. tonnes	23,837	23,532	+1.3%
Gas production, mln m³	9,554	9,459	+1.0%
Oil transportation, thous. tonnes	83,478	80,359	+3.9%
Oil refining, thous. tonnes	19,158	19,593	-2.2%

Operating results are represented in accordance with KMG's ownership interest in joint ventures and associates and 100% of results for fully consolidated subsidiaries, unless otherwise stated. Indicators and calculation results are indicated with rounding. However, when comparing periods, exact values were used without rounding. Any possible adjustments related to rounding, in the Company's opinion, should not have a material effect on operating results.

Hydrocarbon reserves

According to an audit conducted by the international independent company DeGolyer & MacNaughton, prepared in compliance with the international PRMS standards, the proven and probable hydrocarbon reserves (2P) of KMG as of 31 December 2024, amounted to 716 mln tonnes of oil equivalent (5,551 mln barrels of oil equivalent (mln boe)). Compared to 2023, the 2P reserves decreased by 2.4%, primarily due to the impact of economic macro-factors on subsoil users, as well as a reduction in the profitability period of gas production at the Karachaganak field.

Net reserves under PRMS as of 31 December 2024

Reserves, mln toe	2024 (net to KMG)	2023 (net to KMG)	%
Proved (1P)	452	507	-10.9%
Proved plus Probable (2P)	716	733	-2.4%
Proved plus Probable plus Possible (3P)	794	842	-5.8%

Reserves, mln boe	2024 (net to KMG)	2023 (net to KMG)	%
Proved (1P)	3,497	3,943	-11.3%
Proved plus Probable (2P)	5,551	5,681	-2.3%
Proved plus Probable plus Possible (3P)	6,111	6,502	-6.0%

Upstream

Oil and gas condensate production volume for 2024 amounted to 23,837 thous. tonnes (490 kbopd), representing an increase of 1.3%. Production volume of associated and natural gas (before the volumes of reinjection) raised by 1.0% to 9,553 mln m³.

Oil and condensate production, thous. tonnes	2024 (net to KMG)	2023 (net to KMG)	%
OMG	5,098	4,877	+4.5%
EMG	2,790	2,722	+2.5%
MMG	3,085	3,075	+0.3%
Other operating assets	3,321	2,885	+15.1%
Total operating assets	14,294	13,559	+5.4%
Tengiz	5,562	5,779	-3.7%
Kashagan	2,885	3,108	-7.2%
Karachaganak	1,097	1,086	+1.0%
Total megaprojects	9,544	9,973	-4.3%
Total	23,837	23,532	+1.3%

Production at Operating Assets

Oil production of OMG increased by 4.5%, amounting to 5,098 thous. tonnes, while gas production increased by 2.7%, reaching 612 mln m³. Oil production of EMG increased by 2.5%, amounting to 2,790 thous. tonnes, while gas production decreased by 5.5%, reaching 205 mln m³. Oil production of MMG amounted to 3,085 thous. tonnes, while gas production increased by 3.7%, reaching 443 mln m³. The increase in production at the aforementioned operational assets was attributed to a reduction in emergency power outages by the Mangistau Atomic Energy Complex in the reporting year compared to 2023, as well as additional geological and technical measures implemented by the operational assets to increase production volumes.

Production at other operating assets increased by 15.1%, amounting to 3,321 thous. tonnes, while gas production increased by 25.6%, reaching 1,024 mln m³. The increase was primarily due to production volumes at the Dunga field, acquired at the end of 2023, as well as the commissioning of the Rozhkovskoye field ("Ural Oil and Gas" LLP) in December 2023, along with the launch of new wells at the Urikhtau field. Meanwhile, production continued to decline at mature fields of the Kumkol group ("JV "Kazgermunai" LLP, PetroKazakhstan Inc.) due to natural depletion of reserves.

Production at Megaprojects

Oil production at Tengiz decreased by 3.7%, amounting to 5,562 thous. tonnes (121 kbopd). Associated gas production decreased by 5.9%, reaching 3,012 mln m³. The decline in indicators were primarily due to the implementation of overhaul at production facilities.

In April 2024, work began to commission the facilities of the Wellhead Pressure Management Project. As part of the Future Growth Project (FGP), crude oil production at the new Third Generation Plant commenced in January 2025. Currently, production is being gradually ramped up with the aim of reaching the full design capacity of the FGP.

Oil production at Kashagan amounted to 2,885 thous. tonnes (62 kbopd), showing a decrease of 7.2%. Gas production decreased by 5.1%, reaching 1,863 mln m³. The decline was attributed to the planned overhaulof the slug catcher facility in October of the reporting year.

Oil and condensate production at Karachaganak increased by 1.0%, amounting to 1,097 thous. tonnes (24 kbopd). The growth in liquid hydrocarbon production was facilitated by an increase in the reinjection of sour gas into the reservoir at Karachaganak production facilities. At the same time, gas production before reinjection into the formation increased by 6.9%, reaching 2,394 mln m³.

Oil transportation

The total volume of oil trunk pipelines and sea transportation increased by 3.9% to 83,478 thous. tonnes.

Oil transportation ¹, thous. tonnes	2024 (100%)	2024 (net to KMG)	2023 (net to KMG)	%
KazTransOil	44,887	44,887	44,188	+1.6%
Kazakhstan-China Pipeline	18,789	9,394	9,403	-0.1%
MunaiTas²	5,791	2,953	2,819	+4.8%
Caspian Pipeline Consortium	63,007	13,074	13,171	-0.7%
Total trunk pipelines	-	70,309	69,581	+1.0%
The Caspian Sea	2,083	2,083	733	+184.2%
The Black Sea	3,370	3,370	3,605	-6.5%
The MediterraneanSea	7,716	7,716	6,440	+19.8%
Total marine transportation	-	13,169	10,778	+22.2%
Total	-	83,478	80,359	+3.9%

¹ Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation.
² MunaiTas is an equity-consolidated joint venture and transportation volumes are quoted at a 51% ownership interest.

The volume of oil transportation via main pipelines increased by 1.0%, reaching 70,309 thous. tonnes. The increase was attributed to the transshipment of oil from the Kashagan and Karachaganak fields towards the Atyrau-Samara pipeline and the Caspian Pipeline Consortium through the system of JSC "KazTransOil," as well as the growth in domestic transportation volumes directed to oil refineries.

The volume of maritime oil transportation increased by 22.2%, reaching 13,169 thous. tonnes. The growth was driven by the rise in oil transportation across the Mediterranean Sea due to increased shipments from the port of Ceyhan, as well as the expansion of volumes along the Aktau-Makhachkala and Aktau-Baku routes in the Caspian Sea.

Oil turnover

Turnover, mln tonnes*km	2024 (100%)	2024 (net to KMG)	2023 (net to KMG)	%
KazTransOil	35,526	35,526	34,208	+3.9%
Kazakhstan-China Pipeline	16,858	8,429	8,436	-0.1%
MunaiTas²	2,395	1,221	1,141	+7.1%
Caspian Pipeline Consortium	81,615	16,935	17,422	-2.8%
Total	-	62,111	61,206	+1.5%

The oil throughput increased by 1.5%, reaching 62,111 thous. tonnes. The growth was attributed to the rise in domestic oil transportation volumes for oil refineries, as well as the transit of Russian oil to Uzbekistan.

Trading

The volume of sales of KMG's own produced oil and gas condensate increased by 1.4%, reaching 24,019 thous. tonnes, of which 64.5% was supplied for export.

Supplies to the domestic market of KMG's own produced oil and gas condensate to meet domestic demand amounted to 8,519 thous. tonnes, including supplies of crude oil from operating assets (OMG, EMG, KTM) in the volume of 5,224 thous. tonnes to Atyrau, Pavlodar and Shymkent refineries for further processing and sales of oil products.

Downstream

Hydrocarbon refining, thous. tonnes¹	2024 (net to KMG)	2023 (net to KMG)	%
Atyrau refinery	5,547	5,475	+1.3%
Pavlodar refinery	5,500	5,434	+1.2%
Shymkent refinery	2,872	2,870	+0.1%
Caspi Bitum	327	427	-23.3%
Total Kazakhstan's refineries	14,246	14,206	+0.3%
Petromidia	4,619	5,012	-7.9%
Vega	293	374	-21.7%
Total KMG International	4,912	5,387	-8.8%
Total	19,158	19,593	-2.2%

¹Shymkent refinery and Caspi Bitum refining volumes are indicated at a share of 50%, other refineries – 100%.

The total volume of hydrocarbon refining decreased by 2.2% compared to 2023 and amounted to 19,158 thous. tonnes:

The processing volume at Kazakh refineries amounted to 14,246 thous. tonnes, which was comparable to the previous year's figure.
The processing volume at KMG International refineries (Petromidia, Vega) in Romania decreased by 8.8%, reaching 4,912 thous. tonnes. The reduction in refining volumes was due to the delayed restart of the soft hydrocracking unit following a fire at the Petromidia refinery on June 21, 2023, as well as the shutdown of the refinery for planned major maintenance in March of the reporting year. Currently, the KMG International refineries are operating normally at full capacity.

Oil Product Production

Oil Product Production, thous. tonnes		2024 (net to KMG)	2023 (net to KMG)	%
Kazakhstan's refineries	Gasoline	4,300	4,257	+1.0%
	Diesel	4,401	4,312	+2.1%
	Other	4,384	4,382	+0.04%
	Total	13,085	12,951	+1.0%
KMG International	Gasoline	1,266	1,371	-7.7%
	Diesel	2,044	2,148	-4.8%
	Other	1,499	1,702	-11.9%
	Total	4,809	5,221	-7.9%
Total	Gasoline	5,566	5,628	-1.1%
	Diesel	6,446	6,460	-0.2%
	Other	5,883	6,084	-3.3%
	Total	17,894	18,172	-1.5%

The volume of oil product production at Kazakh and Romanian refineries decreased by 1.5%, amounting to 17,894 thous. tonnes.:

Kazakhstan refineries produced 13,085 thous. tonnes of oil products, which is 1.0% higher than the 2023 figures, driven by improved efficiency of production facilities.
KMG International refineries (Petromidia, Vega) produced 7.9% less oil products, amounting to 4,809 thous. tonnes, primarily due to the corresponding decrease in processing volumes at the refineries.

Sales volume of KMG’s oil products produced in Kazakhstan, thous. tonnes

	2024			2023			%
	Dom. mkt.	Exp.	Total	Dom. mkt.	Exp.	Total	Dom. mkt.	Exp.	Total
Gasoline	1,582	-	1,582	1,529	-	1,529	+3.5%	-	+3.5%
Diesel	1,673	-	1,673	1,512	-	1,512	+10.7%	-	+10.7%
Other	1,328	688	2,016	1,184	716	1,899	+12.2%	-3.8%	+6.2%
Total	4,583	688	5,272	4,224	716	4,940	+8.5%	-3.8%	+6.7%

The volume of wholesale sales of KMG's own oil products increased by 6.7%, reaching 5,272 thous. tonnes. The growth in wholesale sales to the domestic market was driven by an increase in oil volumes from OMG and EMG, directed for further processing and sales of KMG's own oil products, as well as an increase in sales of diesel fuel from the carryover stocks of 2023.

For further information, please visit https://www.kmg.kz

Contacts: Email: ir@kmg.kz, Tel: +7 7172 78 64 34

About JSC National Company KazMunayGas:

KMG’s main assets are as follows:

Upstream: Ozenmunaigas (OMG) – 100%, Embamunaigas (EMG) – 100%, KazakhTurkmunai (KTM) – 100%, KazMunayTeniz – 100%, Urikhtau (UO) – 100%, Dunga – 60%, Ural Oil and Gas (UOG) – 50%, Mangistaumunaigaz (MMG) – 50%, Kazgermunai (KGM) – 50%, Karazhanbasmunai (KBM) – 50%, KazakhOil Aktobe (KOA) – 50%, PetroKazakhstan Inc (PKI) – 33%, Tengizchevroil (Tengiz) – 20%, Karachaganak – 10%, Kashagan – 16.88%.
Midstream: KazTransOil – 90%, Kazakhstan China Pipeline (KCP) – 50%, Munai Tas – 51%, Batumi Oil Terminal – 100%, Caspian Pipeline Consortium (CPC) – 20.75%, Kazmortransflot – 100%.
Downstream: Pavlodar refinery – 100%, Atyrau refinery – 99,53%, Shymkent refinery – 49,72%, Caspi Bitum – 50%, KMG International – 100%, Petromidia – 54,63%, Vega – 54,63%, KazRosGas – 50%, Kazakhstan Petrochemical Industries Inc – 49.5%, Silleno – 40%.

NC KazMunayGas JSC announces personnel appointments

Mon, 10 Feb 2025 18:37:10 +0500

Shafkat Kudabayev has been appointed Deputy Chair of the Management Board of NC KazMunayGas JSC.

S. Kudabayev graduated from the Karaganda University of Business, Management and Law, Karaganda Buketov University, Gubkin Russian State University of Oil and Gas.

He began his career in 2001 as a lead specialist in the RoK’s Ministry of State Revenues.

From 2002 to 2020, he held various positions in the RoK’s Ministry of Finance: Head of the Legal Office of the MoF’s Tax Committee, Head of the Karaganda Region Tax Department, Head of the Specialized Office of the MoF’s State Revenue Committee, etc.

In 2020-2021 - tax expert at BTS Digital Ventures Fund PC.

In 2021-2022 - Executive Director of the Fiscal Regulation Department, KAZENERGY.

In 2022-2024 - Director of the Subsurface Use Department of the RoK’s Ministry of Energy.

Since October 2024, he worked as a business partner of the Service of the Chair of the Management Board of the Control and Organizational Work and External Relations Department of NC KazMunayGas JSC.

S. Kudabayev will be in charge of the legal unit.

«KazMunayGas» Improves Rating in International Climate Reporting by CDP

Mon, 10 Feb 2025 15:26:05 +0500

KMG has received a «В» score in the 2023 Carbon Disclosure Project (CDP) rating, an improvement from the previous «С» rating.

This increase reflects a significant enhancement in the company’s approach to climate-related issues and demonstrates KMG's growing commitment to environmental protection.

The CDP is an international rating agency that assesses the efforts of companies and governments in mitigating negative environmental impacts. Its electronic database on carbon reporting is the largest global registry of corporate greenhouse gas (GHG) emissions and climate change strategies, which serves as a valuable resource for companies when making investment decisions.

Since its inception in 2000, the Carbon Disclosure Project has gathered annual data from over 28,000 companies regarding their greenhouse gas emissions, water management practices, and biodiversity conservation efforts.

CDP KMG questionnaire for 2023:

https://www.kmg.kz/upload/iblock/96e/2hu3nwlb3csq6iuc8va0an5l33lj6b4p/KazMunayGas%20National%20Company%20JCS-02-10-2024-CORPORATE-09-09.pdf

KazMunayGas strengthens cooperation in geological exploration with Shell and Chevron

Fri, 10 Jan 2025 19:05:58 +0500

Askhat Khassenov, Chairman of the Management Board of NC KazMunayGas JSC, met in Astana with Ali Al Janabi, Senior Vice President and Country Chairman of Shell in Kazakhstan, and Dylan Morgan, Deputy Managing Director of Chevron Eurasia Business Unit.

During the discussions, KazMunayGas also made Agreements with Shell and Chevron for the right to use the geological information, which will enable efficient use of the seismic study results for planning joint exploration work.

“We are confident that a partnership with the leading global energy companies will give new impetus to the development of geological exploration in Kazakhstan, and will help attract new technology and foreign direct investment,” A. Khassenov noted.

Cooperation with the strategic partners is aimed at jointly studying the prospects of the Mugodzhar project in Aktobe region.

Head of State receives Askhat Khassenov, CEO of KazMunayGas

Thu, 09 Jan 2025 18:20:24 +0500

Kassym-Jomart Tokayev heard a report on the national company's 2024 operating results. According to Askhat Khassenov, oil and condensate production in the KMG group amounted to 23.8 million tonnes, exceeding the 2023 figure by 1.3%. To maintain the production level, the Technology Challenges Program is being implemented, which provides for the use of enhanced oil recovery methods with a differentiated approach to each field.

The President was informed that the design stage of the Kalamkas Offshore project worth $6.4 billion had begun. Further, drilling began in 2024 at the Turgai Paleozoic, Karaton Sub-salt, Karazhar and Taisoigan wells, where the resources exceed 800 million tonnes of oil equivalent.

The Head of State was informed that oil transportation in 2024 exceeded the 2023 figure by 4% and amounted to 83.6 million tonnes

Last year, domestic oil refineries processed 17.44 million tonnes of oil. To supply the domestic market, measures were taken to increase the production of light oils by 370 thousand tonnes against 2023.

According to the CEO of KazMunayGas, CASPI BITUM LLP is implementing a project to increase bitumen production to 750 thousand tonnes annually. Early construction work began on a $7.4 billion polyethylene production plant project, with an annual capacity of 1 million 250 thousand tonnes of products.

In the Mangistau region, construction of a desalination plant is underway to provide high-quality drinking water to the residents of Zhanaozen, and construction of a 247 MW hybrid power plant also began.

In addition, Kassym-Jomart Tokayev was provided with information on the implementation of social projects in the country's regions.

At the end of the meeting, the President instructed that systematic work on geological exploration, implementation of major investment projects and development of the petrochemical industry be continued.

Source: Akorda.kz — The official website of the President of the Republic of Kazakhstan

KMG PetroChem and Tengizchevroil agree on the supply of dry gas to Gas Processing Plant in Atyrau oblast

Wed, 11 Dec 2024 17:23:47 +0500

On December 11, 2024, KMG PetroChem LLP, a subsidiary of NC KazMunayGas JSC, and Tengizchevroil LLP (TCO) signed a Dry Gas Purchase and Sale Agreement, which includes additional improved guarantees for the supply of raw materials. In particular, TCO will supply up to 9 billion m³ of dry gas per year to a gas processing plant in the Atyrau region. Whilst, extracted ethane from the dry gas will serve as feedstock for the polyethylene production plant (Polyethylene Project in Atyrau Oblast), with a capacity of 1.25 million tons per year.

Both the related Gas Separation Complex (GSC) and polyethylene projects are not only anchor projects but also unique for the country in terms of scale and technology. This is the first time that projects of this nature have been implemented in Kazakhstan. The Gas Separation Complex project is expected to recover at least 98% of ethane from dry gas and the polyethylene plant is expected to produce high quality products.

“Thanks to the revision of a number of conditions of the previously signed agreement, we are one step closer to implementing strategically important oil and gas chemical projects for Kazakhstan - the Gas Separation Complex and polyethylene plant. These projects are primarily aimed at furthering the industrial and economic development of the country,”- said Askhat Khassenov, Chairman of the Management Board of KazMunayGas.

“TCO is a key supporter of the Republic of Kazakhstan’s energy industry, including its strategy to develop its petrochemical industry. The signing of the updated dry gas supply agreement for the Gas Separation Complex project is a significant milestone for Kazakhstan’s petrochemical industry, and this is the third project in which TCO will be a major supplier of related feedstocks,” - said Kevin Lyon, General Director of Tengizchevroil LLP.

***

KMG PetroChem LLP (formerly KLPE LLP) is a 100% subsidiary of NC KazMunayGas JSC. The company implements and coordinates projects in the field of oil and gas chemistry within the KMG Group. KMG PetroChem's activities include the development of a projected polyethylene plant and Gas Separation Complex, as well as other oil and gas chemical projects.

Tengizchevroil LLP (TCO) is a Kazakhstani partnership that develops, produces, and markets crude oil, LPG, dry gas, and sulfur. TCO implements modern technologies and conducts its operations in accordance with world-class safety and environmental standards. In April 1993, TCO was formed between the Republic of Kazakhstan and Chevron Corporation. Partners are Chevron, 50 percent; KazMunaiGas NC JSC, 20 percent; ExxonMobil Kazakhstan Ventures Inc., 25 percent and Lukoil, 5 percent.

KazMunaiGas is committed to the implementation of advanced compliance standards

Mon, 09 Dec 2024 17:27:47 +0500

December 9 is the International Anti-Corruption Day. This is an important occasion to recall our common commitment to honesty, transparency and ethical business conduct.

KMG builds its activities on high international standards of ethics and takes all possible steps to prevent corruption. An important tool in this work is the compliance activity, implemented in the KMG group of companies since 2019.

Compliance standards allow you to minimize the risks associated with possible violations, both within the company and when interacting with partners. To eliminate the prerequisites for violations, internal risks are analyzed and organizational and managerial processes are improved.

The KMG Group of companies has a real-time information system that allows each employee or partner of the company to report any illegal actions through the Hotline.

This ensures the openness and transparency of our interaction. In addition, candidates for key positions are checked for compliance with the company's ethical standards, which allows you to select the appropriate specialists.

Since 2020, mandatory declaration of conflicts of interest has been introduced for all employees of the company. KMG cooperates on an ongoing basis with authorized state bodies in the field of anti-corruption. So, on October 30 this year, a memorandum of mutual cooperation was signed with the Department of the Anti-Corruption Service of the Republic of Kazakhstan for the Mangystau region.

To raise the awareness of employees, seminars and meetings on anti-corruption legislation are regularly held with the participation of representatives of the Anti-Corruption Service of the Republic of Kazakhstan.

By contributing to maintaining high standards of honesty and ethics in our work, we will continue to strive for excellence based on the principles of openness and responsibility. Strengthening the reputation and trust in the company, supporting the principles that underpin the sustainable development of business and a prosperous society in our country, is one of the important tasks of the Company.

KMG holds seminar on human rights for employees

Tue, 26 Nov 2024 00:00:00 +0500

KazMunayGas (KMG) held the Fundamentals of Human Rights: Protection and Promotion practical seminar for the company employees and subsidiaries representatives.

The event was held in a hybrid format, which made it possible to reach participants from different regions and ensure wider involvement. A total of 55 people took part in the seminar.

Experts from the ESGQ Rating Agency held training sessions to raise employee awareness about the basic principles of human rights protection and their integration into corporate activities. Examples of successful local community outreach and inclusivity projects were also presented.

This event became part of the KMG long-term strategy aimed at developing a corporate culture based on human rights principles and compliance with ESG standards.

Financial results for the nine months of 2024

Fri, 22 Nov 2024 15:00:00 +0500

Joint-stock National Company KazMunayGas (“KMG” or Company), Kazakhstan's national oil and gas company, published its interim condensed consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) 34 "Interim Financial Statements" for the three and nine months ended 30 September 2024, with an independent auditor’s report on the results of the review of interim financial information.

Key financial indicators for nine months of 2024^[1] compared to nine months of 2023:

Revenue amounted to 6,349 bln tenge (USD 13,838 mln) compared to 6,088 bln tenge (USD 13,440 mln);
EBITDA amounted to 1,601 bln tenge (USD 3,490 mln) compared to 1,679 bln tenge (3,706 mln);
The Company's net profit including share in income of joint ventures and associates amounted to 867 bln tenge (USD 1,890 mln) compared to 946 bln tenge (USD 2,089 mln);
Net profit adjusted for share in profit of joint ventures and associates^[2] amounted to 1,018 bln tenge (USD 2,220 mln) compared to 597 bln tenge (USD 1,317 mln);
Free cash flow amounted to 1,012 bln tenge (USD 2,207 mln) compared to 458 bln tenge (USD 1,010 mln);
Gross debt as of 30 September 2024 amounted to 3,819 bln tenge (USD 7,938 mln) compared to 3,757 bln tenge (USD 8,265 mln) as of 31 December 2023;
The Company's net debt as of 30 September 2024 was at 1,260 bln tenge (USD 2,619 mln) compared to 1,645 bln tenge (USD 3,620 mln) as of 31 December 2023.

Name of the indicator	UoM	9M 2024	9M 2023^[3]	%
Dated Brent^[4], average	$/bbl	82.79	82.07	0.9%
Dated Urals^[4], average	$/bbl	72.16	61.00	18.3%
KEBCO^[4], average	$/bbl	83.21	81.13	2.6%
Exchange rate, average	KZT/USD	458.79	452.97	1.3%
Revenue	bln tenge	6,349	6,088	4.3%
Share in profit of JVs and associates, net	bln tenge	407	565	-27.9%
Dividends received from JVs and associates, net	bln tenge	559	216	158.9%
Net profit	bln tenge	867	946	-8.4%
Net profit adjusted for the share in profit of JVs and associates	bln tenge	1,018	597	70.6%
EBITDA^[5]	bln tenge	1,601	1,679	-4.6%
Adjusted EBITDA^[6]	bln tenge	1,752	1,329	31.8%
CAPEX (accrual basis)	bln tenge	444	494	-10.0%
CAPEX (cash basis)	bln tenge	408	498	-18.1%
Free cash flow^[7]	bln tenge	1 012	458	121.2%
Gross debt^[8]	bln tenge	3,819	3,757^[9]	1.7%
Net debt^[10]	bln tenge	1,260	1,645⁹	-23.4%

Operating results for nine months of 2024^[11] compared to nine months of 2023:

The volume of oil and gas condensate production increased by 3.1% and amounted to 18,047 thous. tonnes;
Oil transportation volumes increased by 6.4% and amounted 63,197 thous. tonnes;
The volume of refining of hydrocarbons at Kazakhstani and Romanian refineries amounted 14,122 thous. tonnes compared to 14,901 thous. tonnes.

	9M 2024 (net to KMG)	9M 2023 (net to KMG)	%
Oil production, thous. tonnes	18,047	17,508	+3.1%
Gas production, mln m³	7,202	7,008	+2.8%
Oil transportation, thous. tonnes	63,197	59,371	+6.4%
Raw hydrocarbon processing, thous. tonnes	14,122	14,901	-5.2%

Financial Highlights for nine months of 2024

Revenue

Revenue amounted to 6,349 bln tenge (USD 13,838 mln), which is 4.3% higher than in the first nine months of 2023, mainly due an increase in the volume of KMG International oil sales.

Share in profit of joint ventures and associates

The share in income of joint ventures and associates decreased by 27.9% and amounted to 407 bln tenge (USD 888 mln) mainly as the result of a decrease in profits of “Tengizchevroil” LLP by 152.3 bln tenge (USD 342 mln) due to an increase in depreciation costs due to launch of the Wellhead Pressure Management Project.

EBITDA

EBITDA for the nine months of 2024 amounted to 1,601 bln tenge (USD 3,490 mln) and decreased by 4.6% compared to 1,679 bln tenge (USD 3,706 mln) mainly due to a decrease in the “Exploration and production of oil and gas” and “Corporate” segments as a result of a decrease in profit from Tengizchevroil LLP by 152.3 bln tenge.

Adjusted EBITDA

Adjusted EBITDA reflecting dividends received from joint ventures and associates instead of share in income of joint ventures and associates amounted to 1,752 bln tenge (USD 3,820 mln), showing a growth of 31.8%.

Net profit

The Company's net profit decreased by 8.4% compared to the nine months of 2023 and amounted to 867 bln tenge (USD 1,890 mln). The decrease in net profit is mainly due to a decrease in the share of profits of joint ventures and associated companies.

Net profit adjusted for share in profit of JVs and associates

Net profit adjusted for the share in profit joint ventures and associates increased by 70.6% from 597 bln tenge (USD 1,317 mln) to 1,018 bln tenge (USD 2,220 mln).

Cost of purchased oil, gas, petroleum products and other materials

The cost of purchased oil, gas, petroleum products and other materials in the reporting period decreased by 2.5% and amounted to 3,299 bln tenge (USD 7,190 mln). The decrease in cost is due to a decrease in the volume of oil purchased for processing at the Petromidia plant due to the shutdown of the plant for scheduled major overhaul in March- April of this year.

Operating expenses

Operating expenses increased by 18.2% and amounted to 1,023 bln tenge (USD 2,230 mln) mainly due to the indexation of wage costs for production workers in the regions of presence as well as an increase in transportation costs due to an increase in tariffs and transportation volumes.

Transportation and distribution costs amounted to 203 bln tenge (USD 443 mln), up 15.1% compared to the nine months of 2023. The growth was due to an increase in the volume of export sales of “Embamunaigas” JSC and “Ozenmunaigas” JSC in the CPC direction, as well as an increase in transportation costs due to an increase in tariffs and transportation volumes.

General and administrative expenses increased by 68.9% and amounted to 197 bln tenge (USD 430 mln). The increase was due to the accrual of remuneration to JSC NC "QazaqGaz", a subsidiary of Samruk-Kazyna JSC, for the services of trust management of a 50% stake in “KazRosGaz” LLP in the amount of 53.3 bln tenge, as well as in connection with the provision of sponsorship assistance to flood victims through Samruk-Kazyna Trust in the amount of 10.0 bln tenge in April-May 2024.

Taxes other than income tax remained almost unchanged, amounting to 432 bln tenge (USD 942 mln).

Capital expenditures

The Company's capital expenditures accrual basis (disclosed in the Note “Segment reporting”) amounted to 444 bln tenge (USD 969 mln), a decrease of 10.0% mainly due to the completion of reconstruction and expansion of the Astrakhan-Mangyshlak main water pipeline, as well as the completion of the drilling of an exploration well at the Zhenis project.

Dividends received from JVs and associates

Dividends received from joint ventures and associated companies amounted to 559 bln tenge (USD 1,218 mln) compared to 216 bln tenge (USD 476 mln). This deviation is mainly caused by different payment frequency of dividends of “Tengizchevroil” LLP in the reporting period and last year. The increase was mainly due to dividends paid by “Tengizchevroil” LLP in the amount of 231 bln tenge (USD 502 mln), “KazRosGas” LLP in the amount of 52.7 bln tenge (USD 115 mln), and “Mangistaumunaigas” JSC in the amount of 43.6 bln tenge (USD 95 mln).

Free cash flow

Free cash flow increased in comparison with the nine months of 2023 by 121.2% and amounted to 1,012 bln tenge (USD 2,207 mln). The growth was associated with an increase in dividends received from joint ventures and associated companies, as well as with a decrease in capital expenditures.

Debt management

Debt indicators

Name of the indicator	UoM	30 September 2024	31 December 2023	%
Bonds	bln tenge	3,117	3,046	2.3%
Loans	bln tenge	702	711	-1.2%
Gross debt	bln tenge	3,819	3,757	1.7%

Numbers may not add up due to a rounding.

Total debt as of 30 September 2024 amounted to 3,819 bln tenge (USD 7,938 mln), an increase in tenge terms by 1.7% and decrease by 4.0% in US dollar terms compared to 31 December 2023. The increase in the indicator is due to the fluctuation of the national currency exchange rate in the reporting period, as well as an increase from 3% to 9.3% on the coupon rate of the bonds issued by KMG in favor of Samruk-Kazyna JSC in 2022^[12].

During the reporting period, KMG International, under the existing credit lines, reimbursed a syndicated loan from Bank of Tokyo-Mitsubishi UFJ, Ltd. in the amount of USD 34.4 mln (equivalent to 15.8 bln tenge), a loan from ING Bank in the amount of USD 39.9 mln (equivalent to 18.3 bln tenge n) and a loan from NATIXIS in the amount of USD 83 mln (equivalent to KZT 38.1 bln tenge) for the working capital financing.

During the reporting period Main Water Pipeline LLP received loan from Eurasian Development Bank for the total amount of 21.0 bln tenge with a maturity date of 2033 for refinancing the loan from Halyk Bank.

The increase in total debt was offset by partial early repayment of bonds in the amount of USD 750 mln (equivalent to 358.2 bln tenge), repayment of a loan by KMG International in the amount of USD 34.6 mln (equivalent to 15.9 bln tenge) from Banca Transilvania and partial repayment of a syndicated loan in the total amount of USD 67.5 mln (equivalent to 31.0 bln tenge), including interest.

As at 30 September 2024, based on the notification of the Ministry of Energy of the Republic of Kazakhstan on the termination of the subsoil use contract of the Zhenis project, the Company derecognized the loan received from Lukoil Kazakhstan Upstream LLP (carry-financing) in the amount of 48.1 bln tenge.

Net debt

Net debt as of 30 September 2024 amounted to 1,260 bln tenge (USD 2,619 mln), a decrease in tenge by 23.4% and in US dollar terms by 27.6% in comparison to the volume as of 31 December 2023.

Cash and cash equivalents

Consolidated cash and cash equivalents including deposits

Name of the indicator	UoM	30 September 2024	31 December 2023	%
Cash and cash equivalents	bln tenge	1,263	1,051	20.2%
Long-term deposits	bln tenge	68	64	6.7%
Short-term deposits	bln tenge	1,228	997	23.1%
Cash and cash equivalents including deposits	bln tenge	2,559	2,112	21.2%

Numbers may not add up due to a rounding.

Consolidated cash, cash equivalents, including deposits as of 30 September 2024 increased by 21.2% compared to the indicator as of 31 December 2023 and amounted to 2,559 bln tenge. In US dollar terms, the indicator amounted to USD 5,318 mln and increased by 14.5% compared to the indicator as of 31 December 2023.

Key corporate events from the beginning of 2024:

On 18 January 2024, in Rome, Italy, KMG and Eni S.p.A. signed the Joint Confirmation Agreement on initiation of the Zhanaozen hybrid power plant construction project. The project provides for construction of wind power plant (77 MW) and solar power plant (50 MW) in collaboration with Eni’s subsidiary Plenitude, as well as 120 MW gas power plant in Zhanaozen.
On 21 February 2024, KMG and Tatneft signed a purchase and sale agreement for 50% shares of Karaton Operating Ltd, a shareholder’s agreement and a financing agreement for the Karaton Subsalt project.
On 11 March 2024, KMG and SOCAR signed the Agreement on phased increase in the volumes of Kazakh oil transit across the territory of the Azerbaijan Republic and the Memorandum of Strategic Cooperation in Sale and Purchase of the Kazakh Oil.
On 29 March 2024, legal procedures related to Sinopec’s entry into the project for the construction of a polyethylene plant with a capacity of 1.25 million tonnes in the Atyrau region was completed, thus, the share of participants in the project: KMG — 40% (consolidated), SIBUR — 30%, Sinopec — 30%.
On 28 May 2024, following the results of the annual General Meeting of Shareholders of JSC NC KazMunayGas, Askhat Galimovich Khasenov was appointed Chairman of the KMG Management Board. As of November 2024, the Management Board of KMG consists of 10 people (Khassenov A.G. — Chairman of the Management Board, Iskaziyev K.O., Abdulgafarov D.Ye., Zakirov B.K., Lavrenov V.S., Magauov A.M., Aryssova, D.A., Brekeshev S.A., Abaiyildanov B.K. and Balykbayev R.A.)
On 26 June 2024, KMG completed the payment of dividends to shareholders for 2023. The total amount of dividends was 300.0 bln tenge. The dividends per common share amounted to 491.71 tenge.
On 16 July 2024, a ceremony was held to mark the start of construction of a future 247 MW hybrid power plant in Zhanaozen. The hybrid project involves the combined generation of electricity from renewable energy sources (wind and solar). The capacity of the solar power plant will be 50 MW, wind power - 77 MW, and gas power - 120 MW.
On 11 September 2024, the international rating agency Moody's Ratings upgraded KMG's credit rating from "Baa2" to "Baa1", the outlook was changed to “stable”. KMG's rating is equal to the sovereign rating of the Republic of Kazakhstan.
On 11 September 2024, early construction work began in the Atyrau region on a polyethylene production plant with a capacity of 1.25 million tons per year and an investment volume of about USD 7.4 bln.
On 12 September 2024, KMG made a partial early repayment of Notes in the amount of 750 million US dollars. Savings in coupon payments based on the results of partial early redemption will amount to 92.7 million US dollars. Early repayment was made based on the results of voting by bondholders on the public offering of KMG.
On 14 October 2024, Atyrau Refinery and the European Bank for Reconstruction and Development signed a loan agreement in the amount of 26.6 bln tenge for a period of 3.5 years under the guarantee of KMG. The loan funds were used to refinance the tenge loan from Halyk Bank of Kazakhstan JSC.
On 22 October 2024, KMG and China National Offshore Oil Corporation (CNOOC) signed the main terms of cooperation on the new ‘Zhylyoi’ subsoil project.

For further information, please visit https://www.kmg.kz/en/investors/reporting

Contacts: ir@kmg.kz, Tel: +7 (7172) 78 64 34

About JSC National Company KazMunayGas:

KMG’s main assets are as follows:

Upstream: Ozenmunaigas (OMG) — 100%, Embamunaigas (EMG) — 100%, KazakhTurkmunai (KTM) –100%, KazMunayTeniz — 100%, Urikhtau (UO) — 100%, Dunga — 60%, Ural Oil and Gas (UOG) — 50%, Mangistaumunaigaz (MMG) — 50%, Kazgermunai (KGM) — 50%, Karazhanbasmunai (KBM) — 50%, KazakhOil Aktobe (KOA) — 50%, PetroKazakhstan Inc (PKI) — 33%, Tengizchevroil (Tengiz) — 20%, Karachaganak — 10%, Kashagan — 16.88%.
Midstream: KazTransOil — 90%, Kazakhstan China Pipeline (KCP) — 50%, Munai Tas — 51%, Batumi Oil Terminal — 100%, Caspian Pipeline Consortium (CPC) — 20.75%, Kazmortransflot — 100%.
Downstream: Pavlodar refinery — 100%, Atyrau refinery — 99,53%, Shymkent refinery — 49,72%, Caspi Bitum — 50%, KMG International — 100%, Petromidia — 54,63%, Vega — 54,63%, KazRosGas — 50%, Kazakhstan Petrochemical Industries Inc — 49.5%.

^[1] The amounts were converted to US dollars for user convenience at average exchange rates for respective periods (average USD/KZT for the nine months of 2024 and 2023 were at 458.79 and 452.97 respectively; period-end USD/KZT as of 30 September 2024 and 31 December 2023 were at 481.19 and 454.56 respectively.

^[2] Net profit adjusted for share in profit of joint ventures and associates = Net profit plus dividends received from joint ventures and associates, minus share of income of joint ventures and associates.

^[3] In December 2023, the Company acquired from its subsidiary Samruk-Kazyna Ondeu LLP and a third party, JSC UK MEZ KhimPark Taraz, 99.9% and 0.1% of the shares in Polymer. For more details, see Note 5 to the Consolidated Financial Statements for 9 months of 2024 with the independent auditor's report.

^[4] Source: S&P Global Platts.

^[8] Total debt at the end of the reporting period = bonds plus loans (short-term and long-term). Guarantees issued are not included in the calculation.

^[9] Gross debt and Net debt are shown as of 31 December 2023.

^[10] Net debt at the end of the reporting period: Bonds plus loans minus cash and cash equivalents minus bank deposits (short-term and long-term). Guarantees issued are not included in the calculation.

^[11] Production results are stated in accordance with KMG's shareholdings in joint ventures and associates and 100% for consolidated subsidiaries. More detailed information is available in the press release on production results for nine months of 2024 at the link: https://www.kmg.kz/en/investors/reporting

^[12] Details are disclosed in the Company's financial statements for the relevant period.

KazMunayGas and Air Liquide Discuss Bilateral Cooperation

Tue, 05 Nov 2024 09:00:00 +0500

KazMunayGas CEO Askhat Khassenov and Air Liquide CEO Francois Jacques met in Paris to discuss the prospects for bilateral cooperation in industrial gas production.

One of the key projects is the construction of a new hydrogen unit at the Pavlodar Petrochemical Plant (Pavlodar Plant). The 12.5 TCMH unit will significantly increase the white product yield and will allow the production of winter diesel fuel. The project will be delivered by Air Liquide Munay Tech Gases – Joint Venture between KMG and Air Liquide.

Air Liquide as a global leader in industrial gas production and management offers advanced solutions to optimize the Atyrau Refinery and Pavlodar Plant unit operation, which includes energy efficiency improvement and carbon footprint reduction. These measures will improve environmental performance and stability of hydrogen and nitrogen supplied for various production processes.

A. Khassenov noted that KazMunayGas is ready to cooperate with Air Liquide on mutually beneficial terms to ensure reliable industrial gas supplies to increase diesel fuel production.

Following the meeting, the parties confirmed their intentions to develop a long-term partnership and accelerate the implementation of the new Pavlodar Plant unit project.

For info:

Air Liquide is a French chemical company founded in 1902 and specializing in industrial gas production. Air Liquide is a recognized world leader in this area.

Air Liquide Munay Tech Gases is a joint venture between Air Liquide and KMG with participating interests of 75% and 25%, respectively, established in 2016.

KazMunayGas Actively Improving its Production Companies' Safety Culture

Mon, 04 Nov 2024 12:44:00 +0500

Atyrau hosted the first Health, Safety, Environment Forum, which brought together more than 30 contractors, where the current health and safety trends were considered.

The forum has become an important platform to discuss the key issues, including the managers’ industrial safety responsibility and creation of working conditions. Participants could both share their experiences and demonstrate their knowledge in practice during group exercises.

The event contributed to partnerships between KMG and its contractors, created an atmosphere of open communication and evidenced the importance of such engagements for better safety and efficiency of joint works.

JSC NC KazMunayGas 9M of 2024 Trading Update

Fri, 01 Nov 2024 22:00:00 +0500

National Company KazMunayGas JSC (“KMG” or “Company”), Kazakhstan's national oil and gas company, announces its operating results for the nine months of 2024.

Key operating highlights for the nine months of 2024 compared to the nine months of 2023:

· Oil and gas condensate production increased by 3.1% and amounted to 18,047 thous. tonnes;

· Oil transportation volumes increased by 6.4% and amounted to 63,197 thous. tonnes;

· Hydrocarbons refining volumes at the Kazakh and Romanian refineries amounted to 14,122 thous. tonnes compared to 14,901 thous. tonnes.

	9M 2024 (net to KMG)	9M 2023 (net to KMG)	%
Oil production, thous. tonnes	18,047	17,508	+3.1%
Gas production, mln m³	7,202	7,008	+2.8%
Oil transportation, thous. tonnes	63,197	59,371	+6.4%
Oil refining, thous. tonnes	14,122	14,901	-5.2%

Upstream

Oil and gas condensate production volume for the nine months of 2024 amounted to 18,047 thous. tonnes (497 kbopd) representing an increase of 3.1%. Production volume of associated and natural gas (before the volumes of reinjection) raised by 2.8% to 7,202 mln m³.

Oil and condensate production, thous. tonnes	9M 2024 (net to KMG)	9M 2023 (net to KMG)	%
OMG	3,809	3,625	+5.1%
MMG	2,077	2,011	+3.3%
EMG	2,302	2,295	+0.3%
Other operating assets	2,460	2,132	+15.4%
Total operating assets	10,647	10,063	+5.8%
Tengiz	4,296	4,339	-1.0%
Kashagan	2,306	2,301	+0.2%
Karachaganak	798	805	-0.8%
Total megaprojects	7,400	7,445	-0.6%
Total	18,047	17,508	+3.1%

Production on Operating Assets

Oil production at OMG increased by 5.1%, reaching 3,809 thous. tonnes, and gas production rose by 2.0% to 455 mln m³. Oil production at EMG grew by 3.3%, reaching 2,077 thous. tonnes, while gas production decreased by 4.8%, totaling to 149 mln m³. Oil production at MMG rose by 0.3%, reaching 2,302 thous. tonnes, and gas production increased by 3.9% to 323 mln m³. The growth in production on the above-mentioned operating assets was attributed to a reduction in major power outages from the Mangistau Atomic Energy Complex during the reporting period compared to the same period last year. It was also related to an additional geological and technical measures implemented by the operational assets to boost production volumes.

Production of other operating assets increased by 15.4%, reaching 2,460 thous. tonnes, and gas production grew by 22.3% to 740 mln m³. This growth was mainly due to the acquisition of the Dunga field and the commissioning of the Rozhkovskoye field (Ural Oil and Gas) at the end of last year, as well as the commissioning of new wells at the Urikhtau field. Meanwhile, oil production on mature fields of the Kumkol group continues to decline due to natural resource depletion.

Production on Megaprojects

Oil production at Tengiz decreased by 1.0%, amounting to 4,296 thous. tonnes (125 kbopd). Associated gas production declined by 2.4%, totaling 2,341 mln m³. The decrease was linked to scheduled capital maintenance on two of the five technological lines at the "Integrated Technology Lines" plant in August of this year.

In April 2024, Tengiz started the commissioning of the Wellhead Pressure Management Project facilities, and the launch of the Future Growth Project, according to the updated schedule, is planned for the second quarter of 2025.

Oil production at Kashagan, attributable to KMG, amounted to 2,306 thous. tonnes (67 kbopd), showing an increase of 0.2%. Gas production grew by 2.6%, totaling to 1,490 mln m³. Stable production was achieved due to reliable operation of technological equipment at the field's production facilities.

Oil and condensate production at Karachaganak decreased by 0.8%, totaling 798 thous. tonnes (23 kbopd). The reduction in liquid hydrocarbon output was due to unscheduled shutdowns of gas reinjection compressors and decreased intake from the Orenburg Gas Processing Plant. However, gas production increased by 4.0%, reaching 1,705 mln m³ due to field depletion and a rise in gas volume in the produced gas-liquid mixture.

As part of the initiatives to maintain production levels at Karachaganak, the KEP-1A project (the 5th compressor project) was commissioned on September 6 of this year. Measures are underway to ensure uninterrupted compressor operation, followed by production testing and transfer to operational status. The KEP-1A project is expected to provide an additional 7.1 mln. tonnes of production over the remaining term of the Final Production Sharing Agreement.

Oil transportation

The total volume of oil trunk pipelines and sea transportation increased by 6.4% to 63,197 thous. tonnes.

Oil transportation1, thous. tonnes	9M 2024 (100%)	9M 2024 (net to KMG)	9M 2023 (net to KMG)	%
KazTransOil	33,653	33,653	32,416	+3.8%
Kazakhstan-China Pipeline	13,833	6,916	6,957	-0.6%
MunaiTas²	4,235	2,160	2,033	+6.2%
Caspian Pipeline Consortium	48,479	10,059	9,964	+1.0%
Total trunk pipelines	-	52,788	51,371	+2.8%
The Caspian Sea	1,633	1,633	422	+287.0%
The Black Sea	2,483	2,483	2,742	-9.4%
The Meditarion Sea	6,293	6,293	4,836	+30.1%
Total marine transportation	-	10,409	8,000	+30.1%
Total	-	63,197	59,371	+6.4%
1 Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation. 2 MunaiTas is an equity-consolidated joint venture and transportation volumes are quoted at a 51% ownership interest.

The volume of oil transportation through main pipelines increased by 2.8% and amounted to 52,788 thous. tonnes. This growth was due to the transfer of oil from the Kashagan and Karachaganak fields toward the Atyrau-Samara pipeline and the Caspian Pipeline Consortium via the KazTransOil system, as well as increased volumes of domestic transportation to refineries.

The volume of oil transported by sea grew by 30.1%, reaching 10,409 thous. tonnes. This increase was attributed to higher oil transportation across the Mediterranean Sea, driven by increased shipments from the port of Ceyhan, as well as higher volumes on the Aktau-Makhachkala and Aktau-Baku routes in the Caspian Sea.

Oil turnover

Turnover, mln tonnes*km	9М 2024 (100%)	9М 2024 (net to KMG)	9М 2023 (net to KMG)	%
KazTransOil	26,197	26,197	25,152	+4.2%
Kazakhstan-China Pipeline	12,438	6,219	6,266	-0.7%
MunaiTas²	1,734	884	819	+8.0%
Caspian Pipeline Consortium	63,226	13,119	13,112	+0.1%
Total	-	46,419	45,349	+2.4%

Oil freight turnover increased by 2.4%, reaching 46,419 thous. tonnes. This increase was due to higher volumes of domestic oil transportation to refineries, as well as the transit of Russian oil to Uzbekistan.

Trading

Sales volumes of KMG's own produced oil and gas condensate increased by 3.6% and amounted to 18,337 thous. tonnes, 64.9% of which was exported.

Supplies of own produced oil and gas condensate volumes to cover the needs of the domestic market amounted to 6,435 thous. tonnes, including deliveries of crude oil from operating assets (OMG, EMG, KTM) in the amount of 3,930 thous. tonnes to Atyrau, Pavlodar and Shymkent refineries for further oil refining and sales of oil products.

Downstream

Hydrocarbon refining, thous. tonnes¹	9M 2024 (net to KMG)	9M 2023 (net to KMG)	%
Atyrau refinery	4,422	4,367	+1.3%
Pavlodar refinery	3,973	3,973	0.0%
Shymkent refinery	2,067	2,082	-0.7%
Caspi Bitum	297	352	-15.6%
Total Kazakhstan's refineries	10,758	10,774	-0.1%
Petromidia	3,162	3,840	-17.7%
Vega	203	287	-29.4%
Total KMG International	3,364	4,127	-18.5%
Total	14,122	14,901	-5.2%
¹Shymkent refinery and Caspi Bitum refining volumes are indicated at a share of 50%, other refineries – 100%.

The total hydrocarbon processing volume decreased by 5.2% compared to the same period in 2023, totaling to 14,122 thous. tonnes:

· The processing volume at Kazakhstan's refineries was 10,758 thous. tonnes, comparable to the same period last year.

· The refining volume at KMG International plants (Petromidia and Vega) in Romania decreased by 18.5%, reaching 3,364 thous. tonnes. The decrease in refining volumes occurred due to a fire at the Petromidia plant on 21 June of last year and the resulting delayed restart of the soft hydrocracking unit, as well as the scheduled overhaul shutdown of the Petromidia plant in March of this year. Currently, KMG International plants are being operated normally at full capacity.

Oil Product Production

Oil Product Production, thous. tonnes		9М 2024 (net to KMG)	9М 2023 (net to KMG)	%
Kazakhstan's refineries	Gasoline	3,157	3,162	-0.2%
	Diesel	3,369	3,328	+1.2%
	Other	3,218	3,280	-1.9%
	Total	9,744	9,771	-0.3%
KMG International	Gasoline	827	1,024	-19.2%
	Diesel	1,439	1,657	-13.2%
	Other	1,037	1,320	-21.4%
	Total	3,303	4,001	-17.4%
Total	Gasoline	3,984	4,187	-4.8%
	Diesel	4,808	4,985	-3.6%
	Other	4,255	4,600	-7.5%
	Total	13,047	13,772	-5.3%

The volume of oil product production at Kazakhstan's and Romanian refineries decreased by 5.3%, totaling to 13,047 thous. tonnes:

· Kazakhstan's refineries produced 9,744 thous. tonnes of oil products, which is comparable to the same period last year.

· Oil products production at KMG International plants (Petromidia and Vega) 17.4% less than year on year volumes, totaling to 3,033 thous. tonnes compared to 4,001 thous. tonnes, due to a corresponding decrease in refining volumes at the plants.

Sales volume of KMG’s oil products produced in Kazakhstan, thous. tonnes

	9М 2024 (net to KMG)			9М 2023 (net to KMG)			%
	Dom. mkt.	Exp.	Total	Dom. mkt.	Exp.	Total	Dom. mkt.	Exp.	Total
Gasoline	1,178	-	1,178	1,131	-	1,131	+4.1%	-	+4.1%
Diesel	1,297	-	1,297	1,169	-	1,169	+10.9%	-	+10.9%
Other	994	505	1,499	861	558	1,419	+15.4%	-9.5%	+5.6%
Total	3,469	505	3,973	3,161	558	3,719	+9.7%	-9.5%	+6.8%

KMG's wholesale oil product sales volume increased by 6.8%, reaching 3,973 thous. tonnes. The growth in wholesale sales to the domestic market was due to an increase in oil volumes from OMG and EMG, directed for further processing and the sale of own oil products.

For further information, please visit http://www.kmg.kz

Contacts:

Email: ir@kmg.kz

Tel: +7 7172 78 64 34

About JSC National Company KazMunayGas:

KMG’s main assets are as follows:

Upstream: Ozenmunaigas (OMG) – 100%, Embamunaigas (EMG) – 100%, KazakhTurkmunai (KTM) – 100%, KazMunayTeniz – 100%, Urikhtau (UO) – 100%, Dunga – 60%, Ural Oil and Gas (UOG) – 50%, Mangistaumunaigaz (MMG) – 50%, Kazgermunai (KGM) – 50%, Karazhanbasmunai (KBM) – 50%, KazakhOil Aktobe (KOA) – 50%, PetroKazakhstan Inc (PKI) – 33%, Tengizchevroil (Tengiz) – 20%, Karachaganak – 10%, Kashagan – 16.88%.

Midstream: KazTransOil – 90%, Kazakhstan China Pipeline (KCP) – 50%, Munai Tas – 51%, Batumi Oil Terminal – 100%, Caspian Pipeline Consortium (CPC) – 20.75%, Kazmortransflot – 100%.

Downstream: Pavlodar refinery – 100%, Atyrau refinery – 99,53%, Shymkent refinery – 49,72%, Caspi Bitum – 50%, KMG International – 100%, Petromidia – 54,63%, Vega – 54,63%, KazRosGas – 50%, Kazakhstan Petrochemical Industries Inc – 49.5%.

KMG CEO Controlling the Atyrau Refinery Maintenance Progress

Fri, 01 Nov 2024 20:50:00 +0500

KazMunayGas CEO Askhat Khassenov during his working visit to the Atyrau region on 1 November visited the Atyrau Refinery (AR). Head of KMG personally checked the maintenance activities progress and ordered the AR management to complete pre-commissioning properly and in a timely manner so as to ensure stable and safe production operations.

During the meeting held to discuss the company's current activities and strategic objectives, instructions were given to make every effort towards higher operating performance and energy reliability of AR. A. Khassenov noted the importance of production and environmental projects as well as the plant's readiness to an extended between-overhauls period.

KMG CEO has drawn a special attention of the plant management to the employees working conditions improvement. He emphasized that KazMunayGas is strictly controlling the situation and that all efforts should be made towards stable, safe and uninterrupted operation of the Atyrau Refinery.

“I would like to underline once again that social and living conditions should be continuously improved through comfortable and safe working conditions. This is a priority for KazMunayGas. In demanding quality and safety requirements, we should aspire to high standards and reliability of the enterprise operations to ensure plant's stable and efficient running,” said Askhat Khassenov.

KazMunayGas and Tatneft Start Explorations at the Karaton Pre-Salt

Thu, 31 Oct 2024 10:37:00 +0500

KazMunayGas (KMG) CEO Askhat Khassenov met with Tatneft General Director Nail Maganov.

During the meeting, the managers discussed the progress of preparatory work for drilling of the first 5,500-meter-deep exploratory well at the Karaton Pre-Salt site. Drilling equipment is currently being installed at the site. Drilling is scheduled to begin in November 2024.

The Karaton Pre-Salt site is located in Atyrau and Mangistau regions near the Embamunaigas producing fields.

The parties also discussed prospects for petrochemicals cooperation.

KazMunayGas and Tatneft, to recap, signed in Kazan on 21 February 2024 the Karaton Pre-Salt Project Purchase and Sale Agreement, Shareholders Agreement and Financing Agreement.

KMG and Eni discussed issues of bilateral cooperation

Wed, 30 Oct 2024 00:00:00 +0500

Askhat Khassenov, Chairman of the Management Board of JSC NC «KazMunayGas» (KMG), held a meeting with Luca Vignati, Eni Upstream Director.

During the discussion, the main areas of cooperation were considered, including the implementation of joint projects and prospects for further cooperation aimed at attracting investment in the energy sector of Kazakhstan.

The parties discussed the current status of the Kashagan field expansion projects and the construction of a gas processing plant at the Karachaganak field to supply commercial gas to the domestic market.

The head of KMG, Askhat Khassenov, noted the need to increase the local content in large projects in order to support the development of local production and create additional jobs.

At the meeting, special attention was paid to the project for the construction of the Hybrid Power Plant in Mangystau region. In July 2024, KMG and Eni started the construction of a 247 MW hybrid power plant in Zhanaozen, which will run on solar, wind and gas energy.

The hybrid power plant will ensure a stable, sustainable and reliable supply of electricity to KMG's subsidiaries in the region, including JSC Ozenmunaigas and KazGPZ LLP.

In addition, the prospects for cooperation in the design of oil and gas fields were discussed.

Following the meeting, the parties agreed to strengthen cooperation in key areas.

KazMunayGas and CNPC step up exploration to replenish hydrocarbon reserves in Kyzylorda region

Mon, 28 Oct 2024 00:00:00 +0500

The 2^nd technical seminar on exploration prospects and enhanced oil recovery has started in Kyzylorda. The event was attended by Akim of Kyzylorda Region Nurlybek Nalibayev, KazMunayGas CEO Askhat Khassenov, Vice Minister of Energy Kudaibergen Arymbek, Vice President of China National Petroleum Corporation (CNPC) Zhang Daowei, CNODC President He Wenyuan and leading industry experts.

Kyzylorda was deliberately chosen as a place to discuss oil and gas industry problems. Oil production in the region continues to decline because of reserves depletion at major fields. In 2013 oil production in Kyzylorda region was 11 million tons, while in 2023 it was less than 4 million tons. According to forecasts, this year oil production will decline by almost 3% (3.6 million tons of oil will be produced this year, which is 100 thousand tons less than in 2023).

KMG is now actively working with China National Petroleum Corporation (CNPC) – one of its key partners in the region – to expand exploration activities, survey new sites, replenish oil reserves and introduce advanced technologies.

Askhat Khassenov noted that the South Turgai oil-and-gas region has a great development potential and needs in-depth studies. According to the Complex Sedimentary Basin Studies, the South Turgai Basin forecast reserves are more than 3.2 billion tons. Hydrocarbon reserves replenishment is still a key issue, which needs a full-scale exploration and state-of-the-art technologies in cooperation with international partners.

“The South Turgai oil-and-gas region is one of the recent and most promising exploration regions, which needs further research and innovative approach. Our primary objective is to replenish hydrocarbon reserves through a Paleozoic deposit in-depth studies. This is challenging though practicable and needs close cooperation activities and advanced technology,” Askhat Khassenov said.

To discover new fields, exploration boundaries should be expanded, including in underexplored basins such as Northern Turgai, Shu-Saryssu and Syr Darya.

KazMunayGas as a national company pays particular attention to the resource base development, including in Kyzylorda region. In May this year, KMG with own funds started drilling of a 5,500-meter well at the Turgai Paleozoic site. Wells of were never drilled so deep before in this region earlier.

At the seminar, KazMunayGas and CNODC (a CNPC subsidiary) signed a non-disclosure agreement and plan of joint eastern Pre-Caspian Basin exploration.

Joint studies are expected to specify the exploration sites.

Besides, Akimat of Kyzylorda Region, Ministry of Energy and Kazgermunai signed a regional socio-economic development Investment Project Memorandum.

Raw gas from other fields, under the memorandum, is planned to be processed at the Kazgermunai Gas Plant, which will increase the liquefied petroleum gas supplies to the domestic market.

This partnership will bring more investments to the gas industry, secure stable liquefied petroleum gas supplies to Kyzylorda region, save jobs and raise tax revenues to the regional budget.

For info: CNPC (China National Petroleum Corporation) has a vast experience in down-hole exploration activities. In May 2023, the company began drilling of the Shenditake-1 well in the 10,000-meter-deep Tarim Basin. This project demonstrates CNPC's high expertise in complex projects.

KazMunayGas Boosts International Cooperation in the Oil and Gas Industry

Thu, 24 Oct 2024 12:00:00 +0500

KazMunayGas (KMG) CEO Askhat Khassenov took part in the 29^th International Conference: Oil and Gas of Turkmenistan (OGT-2024).

The event, held from 23 to 25 October in Ashgabat, was attended by the Deputy Prime Minister of Turkmenistan, managers of BP, S&P Global Platts, CNPC, Dragon Oil, representatives of the United Nations, UNDP, the U.S. Department of Commerce, etc.

In his speech at the plenary session, A. Khassenov talked about the Kazakhstan hydrocarbons potential and invited the partners to joint exploration projects.

The KMG CEO also said that the objective is to improve the oil recovery factor at complex fields. Today, KMG is implementing new enhanced oil recovery methods and is open to proposals on experience sharing and oil recovery factor improvement technologies.

“We are actively developing the petrochemical industry. For this purpose, the country's government has created special conditions for investors. We invite international companies to jointly implement projects,” he emphasized.

Moreover, the KazMunayGas CEO said that the Kazakh oilfield service is well experienced in developing complex fields. Today, KMG Drilling & Services (a KMG subsidiary) cooperates with the leading international drilling companies such as Nabors Industries and Parker Wellbore.

It should be noted that earlier KMG DS signed a Caspian Turkmen Sector Drilling Service Contract with Dragon Oil. The Satti Kazakh offshore jackup drilling rig will be first used at the Cheleken field.

Given the oilfield service successful experience, the KMG CEO suggested KazMunayGas as a drilling, well workover and wire line operation partner.

In conclusion, Askhat Khassenov emphasized the importance of a constructive dialogue with all stakeholders and expressed willingness to exchange experiences and technologies.

Besides, on the sidelines of the forum, negotiations were held between the KMG CEO and the management of Turkmennebit, Turkmengas, Dragon oil and CNPC.

KazMunayGas and CNOOC Signed Geological Exploration Agreement

Wed, 23 Oct 2024 00:00:00 +0500

CEO of KazMunayGas (KMG) Askhat Khassenov met in Astana with the Chairman of the Board of Directors of China National Offshore Oil Corporation International Limited (CNOOC) Wang Dongjin.

During the discussions, they talked about the key cooperation aspects and forward geological exploration plans.

At the meeting, the parties signed the main terms of cooperation on the new Zhylyoi subsoil project, which included the basic project activities, agreed between the companies, as follows:

2D (processing and interpretation of the data from 400 l.km) and 3D (field operations, processing and interpretation of the data from 400 square kilometers) seismic surveys;
drilling of one postsalt exploration well (independent stage) 2000 m deep;
drilling of one presalt exploration well (non-independent stage) 4,500 m deep based on the results of 3D seismic data.

According to the preliminary assessment made by KMG, the mineral site's oil reserves may be over 185 million tons.

The signed basic terms of cooperation serve a testimony of CNOOC's serious interest in joint project realization, which gives new hydrocarbons exploration opportunities to both companies.

KMG CEO highlighted the importance of this step for Kazakhstan:

«We believe that the partnership with one of the world's leading energy companies will ramp up the oil and gas industry of Kazakhstan and bring foreign investments to the country as the exploration will be financed by CNOOC», — said A.Khassenov.

In August 2024, KMG and CNOOC signed in Beijing a Geological Exploration Intent Agreement. Thus, the companies expressed their interest in joint activities in this area.

For info:

China National Offshore Oil Corporation (CNOOC) is one of the world leaders in the oil and gas industry, specializing in exploration and production. The company actively cooperates with international partners and participates in the large projects in more than 20 countries.

KMG and AD Ports Group Strengthen Cooperation

Tue, 22 Oct 2024 00:00:00 +0500

KazMunayGas Chief Executive Officer Askhat Khassenov met in Astana with Ammar Al Shaiba, Chief Executive Officer of AD Ports Group's Maritime & Shipping Cluster.

The parties have discussed joint cooperation in the field of cargo transportation by sea as well as prospects of shipbuilding to equip the tanker fleet and support the Caspian offshore projects.

Particular attention was paid to the tanker fleet expansion operationally needed to transport Kazakh oil in the open seas. Earlier, Kazmortransflot (KMTF - a KMG subsidiary) and AD Ports Group signed a Tanker Pooling Agreement.

Today it consists of 4 tankers. During the period of pool operation, 8.8 million tons of oil were transported. AD Ports Group plans to add two additional vessels by the end of this year.

Earlier, the Head of State highlighted a special role of the transport and logistics industry in the country's economy, including development of the Trans-Caspian International Transport Route (TITR).

Currently, three KMTF container carrying ships are running along the TITR line.

Considering the AD Ports Group vast experience in organizing and transportation of container cargo in more than 10 countries, joint shipbuilding and ferry construction projects are now discussed with the Arabian company.

This cooperation will contribute to development of the TITR and entire transit transportation potential of Kazakhstan.

A. Khassenov thanked the AD Ports team for the constructive cooperation.

KazMunayGas Continues Environmental Initiatives: Planting Trees under the Taza Kazakhstan Campaign

Sun, 20 Oct 2024 00:00:00 +0500

As part of the Taza Kazakhstan country's environmental campaign, KazMunayGas contributes to the country greening. 130 new trees over 3 meters high have been planted on the premises of Capital Grammar School #111 (at 55/22 Turan Avenue). Annual tree planting has become a good tradition for the company. So, in the spring of 2024, more than 600 trees were planted at the premises of Capital Grammar School #75 at 28/1 Mangilik Yel Avenue, and on the Mangilik residential complex site at 40 A. Bokeikhan Street, including spruce, birch, maple, apple, pear, elm and linden trees.

Currently, over 37 thousand trees have already been planted in various regions of the country. By the end of the year, KMG plans to increase this number to 88 thousand.

In April this year, we should recap, KazMunayGas organized a large-scale planting of 4.5 million saxaul seedlings on an area of 15 thousand hectares on the dried-up bottom of the Aral Sea, which became an important contribution to the regional ecosystem restoration. Thus, KazMunayGas continues to contribute to the environmental future of the country, strengthening its position as a socially responsible company.

KMG and CNPC discussed key oil and gas cooperation issues

Thu, 17 Oct 2024 22:00:00 +0500

KazMunayGas (KMG) CEO Askhat Khassenov met with the General Director of CNPC Central Asia and Russia Chen Huailong.

The Head of KMG expressed his gratitude to the previous management of the Chinese company for their long-term contribution to the strengthening of bilateral relations and welcomed the new regional CEO of CNPC.

During the meeting, they discussed the key oil and gas cooperation issues, including geological exploration, oil and gas chemistry, oil refining and transportation.

It was noted as well that CNPC is a strategic partner of Kazakhstan. The parties expressed they confidence that they will further continue their successful joint projects.

Earlier, KMG and CNPC during the SCO summit, signed a Framework Agreement on more profound strategic cooperation in the oil and gas industry.

In addition, the parties agreed to hold joint Kazakh-Chinese technical seminars to exchange oil and gas exploration and development technologies. The venue this year will be Kyzylorda.

For info:

CNPC (China National Petroleum Corporation) is a leading oil and gas company in China, founded in 1988. Its main business activities are oil and gas exploration and production, oil refining, petrochemicals production, and petroleum products marketing. CNPC is the parent company of PetroChina, one of the largest publicly traded oil and gas companies in the world.

Atyrau Refinery Shipping Fuels and Lubricants During the Maintenance as Planned

Thu, 17 Oct 2024 00:00:00 +0500

Atyrau Refinery maintenance activities (Maintenance) run to the approved plan.

Scope of activities in process now include equipment cleaning, furnaces and reactors lining, worn-out equipment and catalysts replacement, column equipment internal devices modification, etc. Pressure vessels control, inspection and testing still continue.

Pre-emptively stocked petrol, diesel fuel, liquefied gas, jet fuel and other petroleum products are smoothly and steadily shipped in compliance with the plan of the RK Ministry of Energy.

The plant's petroleum stocks in the tankfarm are as follows to date: petrol - 10.9 thousand tons, diesel fuel - 4.1 thousand tons, jet fuel - 2.4 thousand tons, liquefied gas - 100 tons.

Atyrau Refinery ships daily an average of 1.1 th. tons of petrol and 1.2 th. tons of diesel fuel. AI-92 stored in the oil depots of West Kazakhstan as of 16 Oct 24 was about 2.7 th. tons, in transit - somewhat 1.29 th. tons. The total AI-92 (stored in oil depot + in transit) in the region is 3.98 thousand tons, which is approximately a two weeks' reserve.

The other KMG refineries boosted production of some fuels and lubricants to keep the domestic market stable. Thus, the Pavlodar Plant and PKOP (Shymkent Refinery) daily ship an average of 4.2 and 7.4 thousand tons of petrol and 7 and 5.5 thousand tons of diesel fuel, respectively.

As previously reported, maintenance and repair activities at the Atyrau Refinery and start of its routine operations is planned for the end of October 2024.

KazMunayGas announces the search for a strategic partner for the joint implementation of the Mugojar Project

Thu, 17 Oct 2024 00:00:00 +0500

JSC NC “KazMunayGas” is searching for a strategic partner for joint implementation of the new subsoil use project, Mugojar located in Aktobe region.

Details are provided in the attached file: Full text of the announcement on the search for a strategic partner (pdf)

KazMunayGas announces the search for a strategic partner for the joint implementation of the Berezovski Project

Thu, 17 Oct 2024 00:00:00 +0500

JSC NC “KazMunayGas” is searching for a strategic partner for joint implementation of the new subsoil use project, Berezovski located in West Kazakhstan region.

Details are provided in the attached file: Full text of the announcement on the search for a strategic partner (pdf)

A. Khassenov: "Local Content Expansion and Localization of Goods in Kazakhstan is a Strategic Task for KazMunayGas"

Tue, 15 Oct 2024 10:00:00 +0500

On October 15, Aktau hosted the Business Opportunities in the KazMunayGas Projects – the forum supporting local content. The event was attended by more than 100 country's producers from all regions of Kazakhstan.

In his speech, Askhat Khassenov, Chief Executive Officer of NC KazMunayGas JSC (KMG), noted the importance of production localization in the oil and gas sector.

The participation of Kazakh producers in major KMG projects plays a key role in the country's economy development, creating new jobs and making Kazakh products competitive.

“Local content expansion and localization of goods is not just a priority, but a strategic task to which KazMunayGas pays special attention. We strive to create the necessary conditions in which domestic producers will be able not only to compete with imports, but to offer high-quality solutions for our oil and gas projects,” emphasized A. Khasenov.

Since the beginning of the year, the KazMunayGas Group has procured goods worth more than KZT350 billion, of which over KZT250 billion is the share of products from domestic producers. This is 72% of the total procured goods.

At the business forum, Kazakh producers demonstrated the types of transformer, cable, chemical, and petrochemicals they produce. In turn, representatives of KMG subsidiaries demonstrated samples of imported equipment and goods used in production that fully or partially can be replaced for local products.

Oil companies offered potential partners projects worth KZT334 billion to localize production in Kazakhstan, and KZT20 billion in Zhanaozen.

Businesses were also offered to open oilfield service centers to provide oil equipment repair and maintenance services. Demands for goods and services for large oil and gas projects (Development of the Kalamkas-Sea, Khazar fields, Polyethylene Production Complex, and Construction of a Gas Separation Complex) was discussed as well.

After the forum, offtake contracts have been concluded between KazMunayGas subsidiaries and Kazakh suppliers:

Between Embamunaigas JSC and Atyrau Oil Service LLP on production of petroleum equipment (linear drive systems for sucker-rod pumps) in the amount of over KZT1 billion;
Between Pavlodar Refinery and INTERTRANS C.A LLP - on production of alkylate (high-octane gasoline component) in the amount of over KZT51 billion.

Additionally, a memorandum on organization of foundry production in the Mangistau region was signed between Ozenmunaigas JSC, the Akimat of the Karakiyansky district and JSC KazPetroDrilling (Kaskor-Mashzavod LLP) to increase the local value share in production of oil wells equipment.

Totally, since the beginning of 2024, KazMunayGas has concluded 107 offtake contracts with the local suppliers for a total amount of more than KZT58 billion. Their total share is expected to reach 55% by the end of the year.

Background information

Offtake Contract is an agreement between the customer and supplier for supply of goods that the supplier plans to produce in the future, on pre-agreed terms of cost, quantity (volume) and delivery time (RK Law No. 47-VII On procurement of Certain Entities of the Quasi-public Sector dated 8 June 2021 RKL).

KMG CEO Discussed Cooperation with Romanian Prime Minister's Representative in Astana

Tue, 15 Oct 2024 00:00:00 +0500

On 15 October, a meeting was held in Astana between KazMunayGas (KMG) CEO Askhat Khassenov and State Secretary of the Romanian Prime Minister for Economic Affairs Florin Spătaru.

During the meeting, issues of strengthening cooperation between Kazakhstan and Romania in the energy sector were discussed, in particular, operations of Rompetrol – the member of KMG International Group. Particular attention was paid to projects focusing on productivity enhancement and adaptation to new environmental standards.

During the meeting, the parties expressed interest in continuing the dialogue and joint initiatives that mutually contribute to the economic cooperation development.

KMG International is an international oil company owned by KMG. It has a footprint in 15 countries in Europe, Central Asia and North Africa. The company core operations include oil refining, marketing, trading, and exploration and production. The key asset of KMG International is the Petromidia Refinery in Romania, which is one of the most modern and largest refineries in the Black Sea region.

KMG CEO to Hold Production Meetings in Zhanaozen

Mon, 14 Oct 2024 00:00:00 +0500

During a working visit to the Mangistau region on 14 October, Askhat Khassenov, Chief Executive Officer of NC KazMunayGas JSC (KMG), held production meetings in Zhanaozen.

In particular, the 2024 Ozenmunaigas Oil Production Plan was reported to the KMG CEO. Special attention was paid to the reservoir repressuring activities, well workovers and interventions. The Uzen and Karamandybas rehabilitation project was also discussed.

KMG CEO visited a number of Ozenmunaigas production facilities.

Besides, A. Khassenov visited the village of Kenderli to control the progress of seawater desalination plant construction. The new plant with a daily 50 thousand cubic meters is expected to address the drinking water shortage in Zhanaozen. The project also helps to reduce the technical load on the Astrakhan-Mangyshlak main water line.

“Construction of the desalination plant in Kenderli is an important project for sustainable water supply in the region. This will not only improve the living conditions of local residents, but will create new opportunities for industrial development in Zhanaozen,” emphasized A. Khassenov.

In total, 654 people, more than 200 units of construction machinery and mechanisms (including road and marine dredging equipment) were pulled for the desalination plant project.

The plant's engineering infrastructure is 76% completed, which includes the 201 km main water line and the 83 km high-voltage power line finished by more than 90%.

300 Participants and 17 Professions: Uzdik Maman Competition Results

Sat, 12 Oct 2024 12:00:00 +0500

The annual Uzdik Maman-2024 competition among the KazMunayGas Group workers ended on 12 October in the Mangistau region.

300 participants representing 17 oil and gas professions demonstrated their skills in the competition. This year it became even more powerful as KMG International employees from Romania joined the competition. The participants of the final competitions are the winners of the first stage held among their own teams.

At the closing ceremony, KMG CEO Askhat Khassenov congratulated the participants on held competition, noting that all participants demonstrated good results and a high level of professionalism.

“KazMunayGas and all its subsidiaries play a key role in the development of the country's economy. Major social projects aimed at raising of living standards of citizens are actively implemented in the regions, and this is the direct merit of each of you. The Uzdik Maman-2024 competition has once again proven that our specialists have a high level of knowledge and professionalism,” emphasized A. Khassenov in his speech.

The competition consisted of two stages: theoretical knowledge assessment and practical tasks. The competitions were held at the production sites of KMG subsidiaries - Ozenmunaigas JSC, Mangistaumunaigas JSC (Zhetybai), KazTransOil JSC (Training Center of the Mangystau Oil Pipeline Management Office), KMG Engineering LLP (chemical analysis laboratory, Aktau).

The participants of Uzdik Maman-2024 noted that the competition annually pulls together the working teams of KMG subsidiaries and helps to hone skills of the oil and gas professions.

KazMunayGas Plants More Than 10,000 Trees Throughout the Country

Sat, 12 Oct 2024 10:00:00 +0500

On 12 October, Aktau hosted the Taza Kazakhstan nationwide environmental campaign with the participation of Nurdaulet Kilybai, Akim of Mangistau region, and Askhat Khassenov, Chief Executive Officer of NC KazMunayGas JSC (KMG).

Today's KMG environmental campaign to plant green spaces covered 28 KazMunayGas enterprises in Mangistau, Atyrau, West Kazakhstan, Aktobe, Pavlodar and Kyzylorda regions. Landscaping campaign stretched to the neighboring with Astana, Aktau, Atyrau, Shymkent, Uralsk and Zhanaozen settlements and production fields.

In total, more than 1,400 employees of the KazMunayGas Group took part in the event.

“KazMunayGas is actively participating in a large-scale environmental campaign and is contributing to the country landscaping. Today, employees of the KMG Group have planted more than 10 thousand trees in different parts of the country,” noted KMG CEO.

KazMunayGas National Company is annually planting trees throughout the republic. In the regions of KMG presence, 27 thousand trees were planted this spring. As of today, the total number of green spaces exceeds 37 thousand trees.

In early April 2024, to recap, a large-scale planting of about 4.5 million saxaul seedlings on 15 thousand hectares of the Aral Sea dried bottom was organized by KazMunayGas.

Astana hosts the 2nd KazMunayGas Group Project Management Conference in the

Fri, 11 Oct 2024 00:00:00 +0500

The two-day event is attended by more than 150 specialists from the corporate center of the national company and subsidiaries implementing major capital projects.

Employees of the KMG Group had the opportunity to exchange experience in planning and implementation of major capital projects. The conference agenda includes issues of design and construction, legislation improvement, and best international practices.

Since 2020, KazMunayGas has been systematically implementing a corporate project management. The goal was to raise the level of project management in the KMG Group. A new methodology and project management tools were introduced to achieve this goal together with centralized trainings and key projects support.

KazMunayGas and Turkmennebit Expand Cooperation

Thu, 10 Oct 2024 22:00:00 +0500

During the official visit of the RK President Kassym-Jomart Tokayev to Turkmenistan, NC KazMunayGas JSC (KMG) and the Turkmennebit state concern signed a memorandum of cooperation. On the part of Kazakhstan, the document was signed by KMG CEO Askhat Khasenov, and on the part of Turkmenistan – by Turkmennebit CEO Guvanch Agadzhanov.

The memorandum is to expand partnership in the oil and gas sector and opens up new opportunities for both parties. The companies will jointly study and implement promising projects in geological exploration, development and production of hydrocarbon resources in the Turkmen sector of the Caspian Sea. One of the key tasks will be the use of offshore drilling rigs, exchange of experience and advanced technologies to improve production efficiency.

Besides, the memorandum is an important step towards strengthening cooperation between Kazakhstan and Turkmenistan in the energy sector, emphasizing the striving of both countries for a long-term and mutually beneficial partnership.

It should be noted that earlier KMG Drilling&Services, a KMG subsidiary, signed a contract with Dragon Oil Turkmenistan Ltd. on drilling operations in the Turkmen sector of the Caspian Sea. As part of this agreement, the Satti – Kazakh jack-up drilling rig – will be used for the first time at the Cheleken.

Oilfield services of Kazakhstan go international

Thu, 10 Oct 2024 00:00:00 +0500

The Satti – first jack-up drilling rig built in Kazakhstan – will start drilling operations in the Cheleken – Turkmenian sector of the Caspian Sea. The Satti is a unique invention fully equipped with advanced technologies for challenging offshore drilling operations.

After modification in 2021, its lifting capacity increased from 453 to 680 tons, which gives new opportunities for larger projects. The rig is designed to drill wells up to 6,000 metres deep.

Successful operation of the Satti in the foreign projects witnesses the capability of Kazakhstan to perform complex oil and gas operations globally, providing high quality services.

A branch of KMG Drilling and Services (KazMunayGas subsidiary, which owns the Satti) was opened in Ashgabat due to planned operations, which will help to run activities in Turkmenistan promptly and efficiently. The KMG DS Branch opening ceremony was attended by KMG CEO Askhat Khassenov.

This event marks an important stage in expansion of Kazakhstan's presence in the international oilfield services markets, and strengthens bilateral cooperation between Kazakhstan and Turkmenistan.

In August this year KMG DS and Dragon Oil Turkmenistan Limited signed a contract for drilling works in the Turkmen sector of the Caspian Sea.

For info:

KMG Drilling & Services LLP is a subsidiary of KazMunayGas, a leading provider of drilling services in the Kazakhstan sector of the Caspian Sea, founded in 2008. It owns the first offshore drilling rig Satti.

Oil Turkmenistan Ltd is a subsidiary of Dragon Oil (UAE) engaged in exploration and production of hydrocarbons in the Cheleken Block of the Caspian Sea. The company is owned by EmiratesNational Oil Company (ENOC).

KazMunayGas to distinguish 17 best employees of the year under the ‘Yzdik Maman’ competition in Mangistau region

Tue, 08 Oct 2024 00:00:00 +0500

The annual ‘Yzdik Maman’ competition among operational jobs of KazMunayGas (KMG) Group started in Mangistau region and will run from 8 to 12 October.

300 people from KMG companies in Atyrau, Mangistau, Kyzylorda, Aktobe, Pavlodar regions and Shymkent take part in the competition. KMG International employees from Romania are among the participants for the first time this year.

The ‘Yizdik Maman’ is to incentivize the working professions and encourage them to improve their professional level.

17 professions will contest the title in two stages. At the first stage theoretical knowledge will be electronically tested. At the second stage the practical skills will be assessed at the fields of Ozenmunaigas, Mangistaumunaigas, training centre of Mangistau Oil Pipeline Branch of KazTransOil and at the Chemical Laboratory of KMG Engineering in Aktau.

Based on the results of two stages, the best KazMunayGas Group specialists will be qualified.

KMG CEO Visited Tengiz to Discuss Further TCO Development

Fri, 04 Oct 2024 00:00:00 +0500

KazMunayGas (KMG) CEO Askhat Khassenov visited the Tengiz Field in the Atyrau region. Head of KMG inspected the Future Expansion Project (FEP) site and visited the Integrated Production Control Centre (IOCC). As of today, Tengizchevroil (TCO) is close to FEP completion.

A. Khassenov held a meeting with the company's management in the TCO's rotational village. They discussed the current field development, expansion of Kazakh specialists share in the company's staff and development of Kazakh content in procurement of goods and services.

More specifically, it was noted that according to the results of TCO's MRO (maintenance, repair, operation) materials strategic tender, where totally about USD 400 million was budgeted, five long-term contracts were signed with local companies.

Head of KMG set the priority tasks for TCO at the current stage. In particular, he discussed the recommendations of the Mineral Exploration and Development Central Commission (MEDCC) in the field development. Among the priorities is the timely modification of the Tengizchevroil fuel gas system so as to meet the Gas Separation Project schedule.

Special attention was paid to the TCO's maintenance tender, where Kazakh companies are expected to be involved to the planned operations.

Development of Kazakh top management who will be able to take the executive posts in the company were discussed as well.

А. Khassenov met with the TCO workers. He thanked the company's employees for their hard work and dedication. "Tengizchevroil today is the largest taxpayer, providing almost one third of Kazakhstan's oil production. Over the past 30 years, the accumulated oil production volume is totally 580 million tons. The Company has paid USD 129 billion of tax and budget payments".

During the event, TCO employees were awarded with the Kazakh Oil 125^th Anniversary Medals, Decorations from the Ministry of Energy and Appreciation Letters from KazMunayGas.

KMG CEO and President of Transneft Discussed the Vital Cooperation Aspects

Wed, 02 Oct 2024 00:00:00 +0500

On 2 October 2024, Askhat Khassenov, CEO of KazMunayGas (KMG), met in Moscow with Nikolay Tokarev, President of Transneft.

At the meeting, the head of KMG highlighted the stable transportation of Kazakh oil through the Transneft Oil Pipeline and the Caspian Pipeline Consortium (CPC). A. Khassenov either expressed his gratitude to the Russian party for support of Kazakh oil transportation through the Druzhba Oil Pipeline.

The participants of the meeting discussed the vital issues in the field of oil transportation and transit, CPC activities, including the Tengiz-Novorossiysk Pipeline System and CPC Offshore Terminal modernization and reliability programs as well as future CPC load plans.

Deputy CEO of KazMunayGas Visited Atyrau Refinery to Control the Progress of Preventive Maintenance

Wed, 02 Oct 2024 00:00:00 +0500

Deputy CEO of KazMunayGas (KMG) Asset Magauov on 2 October arrived with a working visit to the Atyrau Refinery, where he personally studied the progress of preventive maintenance (PM) activities at the Plant. These works started on 1 October 2024 in accordance with the schedule approved by the RK Ministry of Energy.

Galymzhan Zhussanbayev - General Director of ANPZ - reported about the current state of technical inspection, overhaul and expertise of process equipment and pipelines operational safety as well as about replacement of reactor equipment catalysts. Process equipment clean-up (steaming operations) will be in a closed system so as to prevent air pollution. More than 2,000 employees and about 70 units of special machinery were drawn together for the Refinery's maintenance operations.

Oil products preemptively stocked before continue to be shipped in accordance with the plan approved by the Ministry of Energy. The volume of petroleum product stocks at the beginning of PM activities was as follows: 30,000 tons of petrol; 15,000 tons of diesel fuel; 6.5,000 tons of jet fuel; and 500 tons of liquefied gas.

At the meetings with the plant's employees, A. Magauov highlighted the importance of planned works quality and their full compliance with the deadline and safety regulations. A number of issues related to the Atyrau Refinery operations, including the Tazalyq environmental project, were discussed as well during the visit.

Schoolchildren's Palace Built with the Sponsorship of Kazgermunai Opened in Kyzylorda

Tue, 01 Oct 2024 00:00:00 +0500

Schoolchildren's Palace opening ceremony was held in Kyzylorda on 1 October with the participation of Akim of Kyzylorda region Nurlybek Nalibayev, KazMunayGas's First Deputy CEO Kurmangazy Iskaziyev and Managing Director of Samruk-Kazyna Gibrat Auganov.

Construction of a multifunctional public amenity was financed by Kazgermunai (joint venture is owned on a parity basis by KazMunayGas and PetroKazakhstan Kumkol Resources). The cost of the project was KZT2.4bn. Construction works started in December 2023.

The modern multifunctional complex of about 3,000 square meters was designed for 350 children and includes a technocentre, programming, robotics and industrial design classes, ecological laboratory, greenhouses and winter garden, TV studio, vocal, musical instrument and choreography classes.

Kazgermunai annually participates in charity and sponsorship activities and in the region's large social projects, for which about KZT150mln is budgeted.

Participants of the opening ceremony expressed confidence that the new public amenity will become an educational center with best opportunities for Kyzylorda teenagers' proper development and leisure.

KazMunayGas and IATA Discussed the Cooperation Prospects

Tue, 01 Oct 2024 00:00:00 +0500

CEO of KazMunayGas (KMG) Askhat Khassenov met in Astana on September 30 with the Regional Vice President of IATA in Europe Raphael Schwartzman. The parties discussed cooperation in the field of aviation fuel supply and decarbonization.

Particular emphasis was made on transition of the Kazakh refineries from TC-1/RT fuel to Jet A-1, all types of jet fuel will though remain in production. KMG CEO noted that from 2020 three refineries in Kazakhstan are ready to produce Jet A-1. Production of Jet A-1, however, needs the entire Kazakh aviation fuel infrastructure, including airports, oil depots and transportation, to be ready.

One of the key conversation topics was the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which Kazakhstan joined. A. Khassenov spoke about the progress of the 2022-2031 KMG Low Carbon Development Program (LCDP) and expressed readiness to discuss all possible carbon offsetting and reduction schemes.

In addition, the parties discussed the possibility of sustainable aviation fuel (SAF) production in Kazakhstan. It was noted that KMG has already analysed the market and believes that the future of air conveyance is directly linked to SAF.

At the end of the meeting, Askhat Khassenov expressed his gratitude to Rafael Schwartzman and his colleagues for joint effective work and expressed the confidence in successful realisation of the plans outlined.

For info:

IATA (International Air Transport Association) is an International Air Transport Association, representing the interests of airlines worldwide. It sets global standards for safety, efficiency and sustainable development in aviation. In Kazakhstan, IATA actively co-operates with KazMunayGas, helping to implement international standards in the field of aviation fuel supply.

KazMunayGas Achievements Showcased at KIOGE-2024

Wed, 25 Sep 2024 00:00:00 +0500

The opening ceremony of the 29th Kazakhstan International Oil and Gas Exhibition and Conference KIOGE-2024 held from September 25 to 27 in Almaty was attended by the RK Minister of Energy Almasadam Satkaliev, Minister of Energy of the UAE Suheil Al-Mazroui, CEO of KazMunayGas (KMG) Askhat Khassenov, as well as more than 700 representatives of the oil and gas industry from 25 countries.

Mounts of KMG and its subsidiaries - Kazakhstan Petrochemical Industries Inc. LLP, Kazmortransflot NMSC LLP, KazTransOil JSC, KMG Engineering LLP and Embamunaigas JSC - tell about achievements and modern technologies in the industry.

The presented Dispatching and Analysis Center of KMG is monitoring and analyzing oil and gas production, transportation and refining processes online.

The mount presents KMG Engineering developments, including application of tools on the basis of artificial intelligence and computer vision. These inventions have already been used to create the Tumar system, a software system for improvement of industrial safety at production sites by automatic identification of production processes, hazardous areas, etc. Development of the ABAI information system for KMG oil and gas production companies still continues - a real working system actively implemented in KMG Group is demonstrated. Right at the exhibition the interested suppliers can use the Pilot Testing Center intended to process the incoming pilot tests applications and proposals based on the “one-stop-shop” principle.

KPI Plant presented its samples of polymer products made from polypropylene it is manufacturing. Thus, one of Almaty companies uses it to make marketable plastic chairs, basins, buckets, tanks, crates and containers, as well as components for chairs, while the carpet factory in Shymkent makes excellent quality carpets from domestic polypropylene, which are exported to China. KazTransOil's mount displays the complex technologies used in the pipeline system operation. Kazmortransflot showcased the participants and guests of the exhibition its new oil tankers Taraz and Liwa, which joined the Kazakh maritime fleet last year.

KazMunayGas and General Magnetic Canada Discussed Low-Carbon Development Cooperation

Wed, 25 Sep 2024 00:00:00 +0500

CEO of KazMunayGas (KMG) Askhat Khassenov met on September 25 in Almaty with the CEO of the Canadian company General Magnetic Canada Inc. (GMCI) Alfred Duerr. They discussed the prospects of cooperation in methane emissions reduction and in the Global Methane Commitment.

KazMunayGas is the first Kazakh national company that joined the OGMP 2.0 Partnership to support the initiative. Over the next three years, the company is planning to make a detailed inventory of methane leaks at its production companies and to fix a baseline level of emissions. This will help to effectively monitor and reduce emissions at all stages of the production cycle.

To achieve these goals, Leak Detection and Repair (LDAR) at KMG subsidiaries is planned, which will significantly reduce fugitive methane emissions. Currently, the company is already working over measuring with its partners such as Carbon Limits and Tetra Tech.

The world's most advanced technologies could be used under cooperation with GMCI to monitor and reduce methane emissions.

The parties expressed confidence that joint efforts can lead to a strong reduction in methane emissions and will contribute to the sustainable development of energy sector of Kazakhstan.

For info:

General Magnetic Canada Inc. (GMCI) — a leading Canadian company, founded in 2008 in Calgary, which specializes in advanced technologies development for the energy industry to improve its efficiency and reduce methane emissions while lowering operating costs.

KazMunayGas and Shell Discussed Prospects of Cooperation in Geological Exploration

Wed, 25 Sep 2024 00:00:00 +0500

Askhat Khassenov, KazMunayGas (KMG) CEO, met on September 25 in Almaty, with Ali Al-Janabi, Country Manager of Shell in Kazakhstan. During the meeting the parties discussed prospects and opportunities for cooperation in the field of geological exploration.

KMG and Shell Kazakhstan are studying geological and subsoil exploration projects in the Republic of Kazakhstan.

During the meeting it was noted that Shell is a strategic partner of Kazakhstan. The parties expect to further strengthen partnerships and explore new prospects.

KMG is now focused on a large-scale seismic survey in five areas of the Aktobe, West Kazakhstan and Mangistau regions to get the data until the end of this year. Foreign partners already apply with queries in relation to some of the areas.

Shell Experts Held Technological Seminar for KazMunayGas Refiners in Astana

Tue, 24 Sep 2024 17:00:00 +0500

KazMunayGas (KMG) Technical Development Team of the Oil Refining and Petrochemicals Department under a long-term cooperation with the petrochemical company Shell Catalysts and Technologies (SC&T, a division of Shell Concern) organized on 23-24 September the oil refining and petrochemicals technological seminar in Astana. The event was arranged for KMG and its subsidiaries (Atyrau Refinery, Pavlodar Petrochemical Plant, PKOP and KMG PetroChem) engineers.

The refining process developed by SC&T was presented at the seminar together with the advanced vacuum distillation methods and deep refining technologies used in the hydrocracking process. Special attention was paid to the trends in lube feed production and related technologies development. The seminar also included interactive discussions, where the participants could share thier views and go deep into the details of the industry-related topics they were interested in during the conversation with Shell C&T representatives.

The second day started from answering the questions. Then the participants discussed the details of gas processing, including hydrogen sulfide removal and debottlenecking such as limited equipment throughput that slows down the entire processing process. Bottlenecks may include the low catalyst efficiency, technical challenges, gas composition variations (which needs additional purification steps) and strict environmental standards. Solution of these challenges will help to improve the efficiency and reliability of gas processing, which is important for stable and safe refinery operations.

Separately, refineries decarbonization and petrochemical processes integration with refineries was discussed. MASTER and OMEGA monoethylene glycol (MEG) production technologies were observed at the Q&A session.

In general, the technological seminar was an important step of KazMunayGas and Shell in strengthening cooperation and sharing advanced technologies in the field of oil refining and petrochemistry.

It should be noted that KMG has already held the similar technical seminars with Axens and Lummus Technology this year.

For info:

Shell Catalysts & Technologies (SC&T) — is a division of Shell Concern, formerly known as Shell Global Solutions, which develops and provides advanced catalysts, technical services and licensed processes for the refining industry.

KazMunayGas announces the search for a strategic partner for the joint implementation of the Zhylyoi Project

Mon, 23 Sep 2024 00:00:00 +0500

JSC NC “KazMunayGas” is searching for a strategic partner for joint implementation of the new subsoil use project, Zhylyoi located in Atyrau region.

Details are provided in the attached file: Full text of the announcement on the search for a strategic partner (pdf)

KazMunayGas reports on new appointments

Tue, 17 Sep 2024 00:00:00 +0500

NC KazMunayGas JSC (KMG) informs about changes in the top management.

Asset Magauov and Bekzat Abaiyildanov were appointed as Deputy Chief Executive Officers of KMG.

Asset Magauov will be in charge of Oil Refining and Petrochemicals as well as Refinery Operations.

A. Magauov graduated from the Gubkin State Academy of Oil and Gas with a degree in Fuel and Energy Economics and Management.

He started his career in 1994 as an economist at Tenizmunaigas JSC. Over the years of his career, he worked as a Vice-Minister of Energy and Vice-Minister of Oil and Gas of the Republic of Kazakhstan. He also held the posts of Deputy General Director of Tengizchevroil LLP, General Director of Mangistaumunaigas JSC, Managing Director of NC KazMunayGas CJSC, General Director of the International Center for Development of Oil and Gas Engineering.

Bekzat Abaiyildanov will take helm of the Oil and Gas Production and Geological Exploration.

B. Abaiyildanov graduated from K. Satpayev Kazakh National Technical University with a degree in Management and Production Organization and Oil and Gas Field Development and Exploitation.

He started his career as an Assistant Operator at the Branch of UzenMunaiGas Oil and Gas Production Department No.1. Over the years he worked as a Chief Production Officer at KazMunaiGas EP JSC - General Director of Ozenmunaigas JSC, Chief Exploration and Production Officer of NC KazTransGas JSC, General Director of Caspi Neft JSC.

The new executives now have a number of explicit tasks from the Head of KMG to cope with.

Moody's Ratings upgrades the credit rating of JSC NC “KazMunayGas” to “Baa1”, outlook “Stable”

Fri, 13 Sep 2024 00:00:00 +0500

On September 11, 2024, the international rating agency Moody's Ratings upgraded KMG's credit rating from "Baa2" to "Baa1", the outlook was changed to “stable”.

The upgrade is driven by an upgrade of the sovereign rating of the Republic of Kazakhstan, the company's strategic importance to the state, stable indicators of the company's own creditworthiness, with an acceptable repayment schedule for loans and a sufficient level of liquidity.

The full text of the press release of the agency Moody's Ratings can be found at the following link: Ratings.Moodys.com/ratings-news/428181

JSC NC “KazMunayGas” made partial early repayment of Notes in the amount of 750 million US dollars

Fri, 13 Sep 2024 00:00:00 +0500

On September 12, 2024, JSC NC “KazMunayGas” (hereinafter – KMG) made a partial early repayment of Notes in the amount of 749.9 million US dollars (for reference: issue date – 19 April 2017; total amount – 1 billion US dollars; coupon rate – 4.75%; maturity date – 19 April 2027).

Early redemption is one of the measures constantly carried out by KMG to improve the financial stability of the company, reduce the debt burden and improve the company's credit ratings. Savings in coupon payments based on the results of partial early redemption will amount to 92.7 million US dollars.

Early repayment was made based on the results of voting by bondholders for the public offering of KMG. On September 3, 2024, KMG sent an offer to the holders of the above-mentioned bonds to purchase for cash at face value any and all Notes. The offer expired on September 10, 2024. At the expiration of the offer period, the total volume of Notes that were submitted by holders for redemption amounted to 74.99% of the total amount of issued Notes.

The results of the voting results can be found at the link below.

https://www.kmg.kz/en/press-center/press-releases/finance-sub/

A.Khassenov Held Meeting at the Shymkent Refinery

Fri, 13 Sep 2024 00:00:00 +0500

CEO of NC KazMunayGas JSC (KMG) Askhat Khassenov held a meeting on 13 September as part of his working visit to PKOP LLP (Shymkent Refinery).

The key aspects of the company's activities, production program and plans for the next year were discussed. CEO of KMG gave tasks to the plant Management to reduce fuel consumption and losses, and to strictly abide by the environmental requirements and standards.

Askhat Khassenov paid special attention to the importance of stable and uninterrupted operation of the Shymkent Refinery, and active joint works with CNPC to force implementation of the PKOP Production Expansion up to 12 million tons.

JSC NC “KazMunayGas” and KazMunaiGaz Finance Sub B.V. announce results of tender offer in respect of the Notes due 2027

Wed, 11 Sep 2024 00:00:00 +0500

On 3 September 2024, JSC NC “KazMunayGas” (the “Issuer”) and KazMunaiGaz Finance Sub B.V. (“KMG Finance” and, together with the Issuer, the “Offerors”) launched an invitation to each holder (the “Holders”) (subject to certain offer and distribution restrictions) of the Issuer’s U.S.$1,000,000,000 4.750% Notes due 2027 (the “Notes”) to tender any and all of such Notes for cash (the “Tender Offer”).

The full text of the announcement (pdf)

The full text of the announcement (word)

Polyethylene Forum of Kazakh Manufacturers in Atyrau

Wed, 11 Sep 2024 00:00:00 +0500

Forum of Kazakh manufacturers and suppliers of equipment and materials was held on 11 September in Atyrau. This event organized by the national company KazMunayGas with the support of the Akimat of Atyrau Region and RK Ministry of Energy brought together a wide range of domestic companies.

More than one hundred Kazakh equipment and components manufacturers took part in the Forum. Information about vendor items for the Polyethylene Project was communicated to the participants, and the contracting companies Tecnicas Reunidas (Spain) and Sinopec Engineering Incorporation (PRC) informed them in detail with the construction activities plan and equipment requirements for the future plant.

A number of agreements, including the Cooperation Agreement between the Consortium of Tecnicas Reunidas S.A. and Sinopec Engineering Incorporation (hereinafter - the Consortium) and AtyrauNefteMash was signed during the Forum to provide the large-size equipment production, which includes two columns, one of which is an ethylene fractionator 100-metre long and weighing 1,150 tons.

Cooperation agreements were also signed between the Consortium and with the Union of Machine Builders of Kazakhstan, and IMB Centre, International Oil and Gas Machine Building Centre.

Similar activities will be regularly held to support the local content expansion.

Kazakhstan Polyethylene Plant Construction Started

Wed, 11 Sep 2024 00:00:00 +0500

Today, 11 September 2024, early construction of the polyethylene plant with an annual 1.25 MT production and investments approximately worth USD 7.4 billion started at the National Industrial Petrochemical Technopark Special Economic Zone in Atyrau Region.

The ceremony was attended by Sagyndyk Lukpanov, Member of the RK Senate of the Parliament, Serik Shapkenov, Akim of Atyrau Region, Askhat Khassenov, CEO of NC KazMunayGas JSC, Yerlan Akkenzhenov, Vice Minister of Energy, Olzhas Saparbekov, Vice Minister of Industry and Construction, Sergey Komyshan, Member of the Management Board/Executive Director of SIBUR, and Zhao Tiezhu, Vice President of Sinopec Overseas Investment Holding.

The project is implemented in accordance with the order of Kassym-Jomart Tokayev, the Head of State, to establish an oil and gas chemical industry cluster in the country’s western region and will to become the largest project in the manufacturing sector of Kazakhstan.

Construction is expected to be completed by 2029. Commissioning of the plant will help to substitute imported polyethylene with domestic products and boost the high-value-added goods export.

Therefore, implementation of the project is expected to contribute to GDP growth by 1.2% and generate approximately 8,000 jobs during the construction phase and 800 jobs after production commencement. The project is expected to have a multiplier effect on the national economy by fostering the growth of the associated industries and new end products domestically manufactured.

Polythene, recognised as the world’s most prevalent plastic, finds its use virtually across every sector of the economy.

For information:

The project is implemented by Silleno owned by NC KazMunayGas JSC (40%), Sinopec Overseas Investment Holding (30%) and Sibur Holding PJSC (30%). The project will be funded through shareholder equity and loans from international banks. The plant’s planned product line will feature a wide product range (up to 22 grades of polyethylene), of which 40% are classified as premium grade. This is now possible due to agreements with the world’s industry leading companies, such as Axens (France), Univation Technologies (USA) and Chevron Phillips Chemical (USA). The primary polyethylene feedstock is ethane extracted at the KMG Gas Separation Complex from the dry gas produced at the Tengizchevroil fields. Polyethylene serves as a fundamental component in the manufacture of a diverse array of products, such as pipes, construction and packaging materials, automotive components, medical equipment, and various other items extensively utilized in daily life and industrial applications.

A.Khassenov held meeting to discuss the Aktau Bitumen Plant Expansion Project

Fri, 06 Sep 2024 15:37:36 +0500

Chief Executive Officer of NC KazMunayGas JSC Askhat Khassenov visited on September 6 JV Caspi Bitum LLP, the Aktau Bitumen Plant in Mangistau region. During the working meeting the plant production ramp up to 1.5 million tons was discussed. Modernization of the CDU/VDU unit will help to boost production of road bitumen from 500 to 750 thousand tons per year.

In November-December 2024, dismantling works will start followed by installation of new equipment.

At the moment, the plant provides bitumen to the road construction companies in the volume as per their requests and contracts.

Askhat Khassenov emphasized the importance of works completion before the road construction season in 2025.

For 8 months of 2024 Aktau Bitumen Plant processed about 514 thousand tons of oil and produced over 192 thousand tons of road bitumen.

For info

JV Caspi Bitum LLP (Aktau) is a joint venture founded by NC KazMunaiGas JSC and CITIC Kazakhstan LLP, each owning 50% of the shares. The plant is the only one in Kazakhstan specializing in the production of oxidized and modified road bitumen. Since 2013, the company has been successfully producing high-quality bitumen used in the construction of strategic highways such as the Western Europe-Western China highway. The plant is actively modernizing and expanding its production to meet the country's growing demand for bitumen.

Training of KMG compliance officers: improving qualifications and combating corruption

Fri, 06 Sep 2024 00:00:00 +0500

The Compliance Service of NC KazMunayGas JSC (KMG) organized and conducted training for compliance officers of the subsidiaries and dependent entities, which took place during 5-6 September 2024 in Astana. The training was dedicated to the requirements of the national standard ST RK ISO 37001:2016 "Anti-bribery management systems", aimed to create and maintain an effective anti-corruption system.

The main objective of the exercise was to improve the professional level of the compliance officers and their competencies in managing corruption risks. During the training, the participants studied the modern methods of analysis, identification and assessment of corruption risks, as well as practical aspects of the implementation and monitoring of an anti-corruption management system in accordance with the international and national standards.

Special focus was given to the implementation and adaptation of anti-corruption mechanisms in the subsidiaries and dependent entities of the KMG group. This is an important element of maintaining a high ethical culture and compliance standards throughout the group. The participants discussed various approaches to integrating the anti-corruption system into the existing business processes, and exchanged experiences and best practices.

The workshop summed up the results of the compliance function's operations over the first half of 2024. The participants discussed the key results and challenges faced by compliance services, as well as forward-looking initiatives to combat corruption and strengthen internal control aimed at increasing transparency and accountability of the business processes. The importance of continuous improvement of the compliance function was emphasized, including advanced training of the employees and introduction of new technologies to automate corruption risk management.

The training enabled compliance officers not only to improve their qualifications, but to obtain up-to-date information on the latest international and national requirements in the field of anti-corruption activities as well. This knowledge will help improve the operations of the compliance services and strengthen the anti-corruption mechanisms in KMG group entities.

Kazakhstan and Congo discussed the prospects of joint research and engineering in the oil sector

Wed, 04 Sep 2024 00:00:00 +0500

Chief Executive Officer of NC KazMunayGas JSC (KMG) Askhat Khassenov met on 3 September in Astana with Françoise Joly, Personal Representative of the President of the Republic of Congo for Strategic Affairs and International Negotiations, and Maixent Ominga, General Director of Société Nationale des Pétroles du Congo (SNPC), national oil company of the Republic of Congo.

During a warm and constructive meeting, the parties discussed the opportunities of research and engineering experience sharing and benchmarking in geological exploration and field development. In particular, experts from KMG Engineering (research and development company of KMG Group specialized in fields expertise and new technologies introduction) offered their services to study the characteristics of Congo's fields and development projects feasibility studies.

The industrial networking prospects and best practices in the oil and gas and refineries equipment suppliers qualification were discussed as well. The parties negotiated the potential partnership and exchange of experience in creating attractive conditions for large international investments into petrochemical projects.

We should remind that on 4 August Kazakhstan and Congo signed an agreement on cooperation in the oil and gas sector. Congo, the third largest player in the Africa's oil and gas sector, actively cooperates with the international companies such as Total Energies, Chevron and Eni.

For info:

SNPC (Societe nationale des petroles du Congo), national oil company of the Republic of Congo, was incorporated in April 1998. SNPC founded as a Group operates throughout the oil industry chain with its six active subsidiaries in the upstream and downstream sectors. The company owns shares in the Moho-Bilondo (15%), Nkossa (15%), M'Bundi (8.8%), Kitina (35%), Senji (15%), Yanga (15%), Jambala (35%), Fukanda (35%), Mwafi (35%), Emeraude (49%), Yombo (49%), Tilapia (35%), Azurite (15%) and Turquoise Marine-1 (15%).

JSC NC “KazMunayGas” and KazMunaiGaz Finance Sub B.V. announce tender offer in respect of the Notes due 2027

Tue, 03 Sep 2024 00:00:00 +0500

JSC NC “KazMunayGas” (the “Issuer”) and KazMunaiGaz Finance Sub B.V. (“KMG Finance” and, together with the Issuer, the “Offerors”) today announce their invitations to each holder (subject to certain offer and distribution restrictions) to purchase for cash any and all of the Issuer’s U.S.$1,000,000,000 4.750% Notes due 2027 (of which U.S.$1,000,000,000 in principal amount remains outstanding) (the “Tender Offer”).

The full text of the announcement (Word)

The full text of the announcement (PDF)

Compliance Matters in KMG Group Discussed in Zhanaozen

Tue, 27 Aug 2024 00:00:00 +0500

On 27 August, the Compliance Service of NC KazMunayGas JSC (KMG) held a working meeting with Ozenmunaigas JSC (OMG), KazGPP LLP and the oil service company OMS LLP in Zhanaozen. Particular attention was paid to the matters of proactive reporting via the centralised Hotline of Samruk-Kazyna JSC and the discussion of the role of the compliance function in ensuring corporate ethics in the subsidiary and dependent entities.

The focus was on the effectiveness of proactive reporting via the Hotline, which offers employees and external partners the opportunity to report possible violations and misconduct. The participants noted an increase in confidence in this tool.

Particular emphasis was placed on objectivity and transparency in the handling of reports received via the Hotline. Employees from OMG, KazGPP LLP and OMS LLP shared successful examples of resolving the problems identified and discussed measures to improve the handling of reports in order to minimise the risks of violations of laws and corporate standards.

The meeting participants also emphasised the importance of proactive reporting as a key element in maintaining and developing corporate culture and legal compliance. The transparency and accessibility of the Hotline for employees at all levels of the company was highlighted as a key condition for the effective functioning of the compliance system and adherence to ethical standards.

Following the meeting, decisions were made to further optimise the centralised Hotline, including raising employee awareness of the possibilities and importance of proactive reporting. The event confirmed the importance of the Hotline as one of the main tools for ensuring ethics and transparency in KMG Group.

KMG Demonstrates Stable Operational and Financial Performance for the First Half of 2024

Fri, 23 Aug 2024 00:00:00 +0500

On 23 August 2024, NC "KazMunayGas" JSC held an online Investor Day on the Kazakhstan Stock Exchange (KASE) platform to present its operational and financial results for the first half of 2024.

The results of the reporting period and the Q&A session were conducted by Deputy Chairman of the Management Board Aryssova D.A., Director of the Transportation and Logistics Department Mendybayev E.T., Head of Upstream Assets Management Zhokebayev Zh.M., and Head of Production Planning, Automation, and Business Reengineering Department Igisenova M.Zh.

This is the second time the Investor Day is held by the Company after its IPO on the KASE platform, where the majority of Company’s freely traded shares are listed.

Operating results for the first half of 2024 showed stable growth. Oil production increased by 1.1% compared to the same period last year, reaching 497 thousand barrels per day or 12.0 million tonnes. The total volume of trunk and marine oil transportation increased by 6.2% to 41.7 million tonnes. However, refining volumes decreased by 11.9% compared to the same period in 2023 and amounted to 8.9 million tonnes.

The financial indicators for the reporting period also showed mainly positive dynamics. Revenue increased by 7.5% and amounted to 4.2 trillion tenge and net profit reached 550 billion tenge, which is 12.5% higher than the figures for the first half of 2023, mainly due to a 5.5% increase in the average price of Brent crude oil. Meanwhile, EBITDA amounted to 977 billion tenge demonstrating a 12.4% decrease, primarily due to the delayed start-up of the soft hydrocracking unit at the Petromidia refinery in Romania and its scheduled major overhaul in March of this year.

In June of the reporting year, the Company paid dividends to its shareholders for the year 2023 amounting to 300 billion tenge, or 491.71 tenge per ordinary share. This marks the second consecutive year the Company has paid such record dividends.

"KMG demonstrates stable operational and financial performance for the first half of 2024, continuing a balanced course of development and proper fulfillment of its commitments," noted Deputy Chairman of the Management Board Aryssova D.A.

The consolidated financial statements for the reporting period, the financial press release, and the presentation have been published on the Company's website and on the KASE and AIX exchanges.

Financial results for the first half of 2024

Fri, 23 Aug 2024 00:00:00 +0500

Joint-stock National Company KazMunayGas (“KMG” or Company), Kazakhstan's national oil and gas company, published its interim condensed consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) 34 "Interim Financial Statements" for the three and six months ended on 30 June 2024, with an independent auditor’s report on the results of the review of interim financial information.

Key financial indicators for the first half of 2024^[1] compared to the first half of 2023:

Revenue amounted to 4,239 bln tenge (USD 9,440 mln) compared to 3,943 bln tenge (USD 8,727 mln);
EBITDA amounted to 977 bln tenge (USD 2,175 mln) compared to 1,115 bln tenge (2,469 mln);
The Company's net profit including share in income of joint ventures and associates amounted to 550 bln tenge (USD 1,224 mln) compared to 488 bln tenge (USD 1,081 mln);
Net profit adjusted for share in profit of joint ventures and associates^[2] amounted to 591 bln tenge (USD 1,316 mln) compared to 263 bln tenge (USD 583 mln);
Free cash flow amounted to 604 bln tenge (USD 1,345 mln) compared to 217 bln tenge (USD 480 mln);
Gross debt as of 30 June 2024 amounted to 4,009 bln tenge (USD 8,502 mln) compared to 3,757 bln tenge (USD 8,265 mln) as of 31 December 2023;
The Company's net debt as of 30 June 2024 was at 1,573 bln tenge (USD 3,337 mln) compared to 1,645 bln tenge (USD 3,620 mln) as of 31 December 2023.

Name of the indicator	UoM	6M 2024	6M 2023	%
Dated Brent^[3], average	$/bbl	84.06	79.66	5.5%
Dated Urals³, average	$/bbl	72.52	53.86	34.6%
KEBCO³, average	$/bbl	84.40	77.74	8.6%
Exchange rate, average	KZT/USD	449.09	451.80	-0.6%
Revenue	bln tenge	4,239	3,943	7.5%
Share in profit of JVs and associates, net	bln tenge	268	400	-32.9%
Dividends received from JVs and associates, net	bln tenge	310	174	77.4%
Net profit	bln tenge	550	488	12.5%
Net profit adjusted for the share in profit of JVs and associates	bln tenge	591	263	124.5%
EBITDA^[4]	bln tenge	977	1,115	-12.4%
Adjusted EBITDA^[5]	bln tenge	1,018	890	14.4%
CAPEX (accrual basis)	bln tenge	282	301	-6.6%
CAPEX (cash basis)	bln tenge	270	354	-23.9%
Free cash flow^[6]	bln tenge	604	217	178.7%
Gross debt^[7]	bln tenge	4,009	3,757^[8]	6.7%
Net debt^[9]	bln tenge	1,573	1,645⁸	-4.4%

Operating results for the half quarter of 2024^[10] compared to the first half of 2023:

The volume of oil and gas condensate production increased by 1.1% and amounted to 11,989 thous. tonnes;
Oil transportation volumes increased by 6.2% and amounted 41,733 thous. tonnes;
The volume of refining of hydrocarbons at Kazakhstani and Romanian refineries amounted 8,902 thous. tonnes compared to 10,109 thous. tonnes.

	6M 2024 (net to KMG)	6M 2023 (net to KMG)	%
Oil production, thous. tonnes	11,989	11,860	+1.1%
Gas production, mln m³	4,840	4,789	+1.1%
Oil transportation, thous. tonnes	41,733	39,309	+6.2%
Raw hydrocarbon processing, thous. tonnes	8,902	10,109	-11.9%

Financial Highlights for the first half of 2024

Revenue

Revenue amounted to 4,239 bln tenge (USD 9,440 mln), which is 7.5% higher than in the first half of 2023, mainly due an increase in the volume of KMG International oil sales, as well as an increase in the average price of Brent crude oil by 5.5%

Share in profit of joint ventures and associates

The share in income of joint ventures and associates decreased by 32.9% and amounted to 268 bln tenge (USD 597 mln) mainly as the result of a decrease in profits of “Tengizchevroil” LLP by 121.7 bln tenge (USD 267 mln) due to an increase in depreciation costs due to launch of the Wellhead Pressure Management Project and The Future Growth Project facilities.

EBITDA

EBITDA for the first half of 2024 amounted to 977 bln tenge (USD 2,175 mln), down 12.4% compared to 1,115 bln tenge (USD 2,469 mln) mainly due to a decrease in the Refining segment due to the late launch of the soft hydrocracking unit at Petromidia refinery and the shutdown of the plant for scheduled major overhaul in March of this year.

Adjusted EBITDA

Adjusted EBITDA reflecting dividends received from joint ventures and associates instead of share in income of joint ventures and associates amounted to 1,018 bln tenge (USD 2,267 mln), showing a growth of 14.4%.

Net profit

The Company's net profit increased by 12.5% compared to the first half of 2023 and amounted to 550 bln tenge (USD 1,224 mln). The increase in net profit is mainly due to the growth in revenue and an increase in interest income on bank deposits and financial assets.

Net profit adjusted for share in profit of JVs and associates

Net profit adjusted for the share in profit joint ventures and associates increased by 124.5% from 263 bln tenge (USD 583 mln) to 591 bln tenge (USD 1,316 mln).

Cost of purchased oil, gas, petroleum products and other materials

The cost of purchased oil, gas, petroleum products and other materials in the reporting period increased by 8.2% and amounted to 2,340 bln tenge (USD 5,211 mln). The increase in cost was largely due to an increase in the volume of oil purchased for resale, as well as due to an increase in the average price of oil.

Operating expenses

Operating expenses increased by 8.2% and amounted to 639 bln tenge (USD 1,423 mln) mainly due to the indexation of wage costs for production workers in the regions of presence as well as an increase in transportation costs due to an increase in tariffs and transportation volumes.

Transportation and distribution costs amounted to 132 bln tenge (USD 293 mln), up 10.1% compared to the first half of 2023. The growth was due to an increase in the volume of oil sales by KMG International, as well as an increase in transportation costs due to an increase in tariffs and transportation volumes.

General and administrative expenses increased by 62.7% and amounted to 117 bln tenge (USD 262 mln). The increase was due to the accrual of remuneration to JSC NC "QazaqGaz", a subsidiary of Samruk-Kazyna JSC, for the services of trust management of a 50% stake in KazRosGaz LLP in the amount of 20.95 bln tenge, as well as in connection with the provision of sponsorship assistance to flood victims through Samruk-Kazyna Trust in the amount of 10.0 bln tenge in April-May 2024.

Taxes other than income tax increased by 7.1% to 302 bln tenge (USD 673 mln), mainly due to higher excise tax expenses, mineral extraction tax, and rent tax on crude oil exports due to higher oil prices.

Capital expenditures

The Company's capital expenditures accrual basis (disclosed in the Note “Segment reporting”) amounted to 282 bln tenge (USD 627 mln), a decrease of 6.6% mainly due to the completion of reconstruction and expansion of the Astrakhan-Mangyshlak main water pipeline, as well as the completion of the drilling of an exploration well at the Zhenis project.

Dividends received from JVs and associates

Dividends received from joint ventures and associated companies amounted to 310 bln tenge (USD 689 mln) compared to 174 bln tenge (USD 386 mln). This deviation is mainly caused by different payment frequency of dividends of “Tengizchevroil” LLP in the reporting period and last year. The increase was mainly due to dividends paid by TCO in the amount of 68 bln tenge (USD 153 mln), Mangistaumunaigas JSC in the amount of 42.7 bln tenge (USD 95 mln) and dividends paid by “KazRosGas” LLP of 21.0 bln tenge (USD 47 mln).

Free cash flow

Free cash flow increased in comparison with the first half of 2023 by 178.7% and amounted to 604 bln tenge (USD 1,345 mln). The growth was associated with an increase in dividends received from joint ventures and associated companies, as well as with a decrease in capital expenditures.

Debt management

Debt indicators

Name of the indicator	UoM	30 June 2024	31 Dec 2023	%
Bonds	bln tenge	3,372	3,046	10.7%
Loans	bln tenge	637	711	-10.4%
Gross debt	bln tenge	4,009	3,757	6.7%

Numbers may not add up due to a rounding.

Total debt as of 30 June 2024 amounted to 4,009 bln tenge (USD 8 502 mln), an increase in tenge by 6.7% and by 2.9% in US dollar terms compared to 31 December 2023 mainly due to an increase from 3% to 9.3% on the coupon rate of the bonds issued by KMG in favor of Samruk-Kazyna JSC in 2022^[11].

As at 30 June 2024, KMG International received a syndicated loan in the amount of USD 80.5 mln (equivalent to 36.1 bln tenge) under the existing credit line for the working capital financing.

The increase in total debt was partially offset by the full repayment of a loan by KMG International in the amount of USD 59.3 mln (equivalent to 26.6 bln tenge) from Credit Agricole and a partial repayment of a loan from BCP in the total amount of USD 44 mln (equivalent to 19.7 bln tenge). Also, in the reporting period, Atyrau and Pavlodar refineries partially repaid a loan from Development Bank of Kazakhstan JSC in the total amount of 23.7 bln tenge, including interest rates. During the first half of 2024, Atyrau refinery partially repaid the loan from Halyk Bank in the total amount of 19.2 bln tenge.

As at 30 June 2024, based on the notification of the Ministry of Energy of the Republic of Kazakhstan on the termination of the subsoil use contract of the Zhenis project, the Company derecognized the loan received from Lukoil Kazakhstan Upstream LLP (carry-financing) in the amount of 47.9 bln tenge.

Net debt

Net debt as of 30 June 2024 amounted to 1,573 bln tenge (USD 3,337 mln), an increase in tenge by 4.4% and in US dollar terms by 7.8% in comparison to the volume as of 31 December 2023.

Cash and cash equivalents

Consolidated cash and cash equivalents including deposits

Name of the indicator	UoM	30 June 2024	31 Dec 2023	%
Cash and cash equivalents	bln tenge	1,692	1,051	61.0%
Long-term deposits	bln tenge	67	64	4.5%
Short-term deposits	bln tenge	667	997	-32.1%
Cash and cash equivalents including deposits	bln tenge	2,435	2,112	15.3%

Numbers may not add up due to a rounding.

Consolidated cash, cash equivalents, including deposits as of 30 June 2024 increased by 15.3% compared to the indicator as of 31 December 2023 and amounted to 2,435 bln tenge. In US dollar terms, the indicator amounted to USD 5,165 mln and increased by 11.2% compared to the indicator as of 31 December 2023.

Key corporate events from the beginning of 2024:

On 18 January 2024, in Rome, Italy, KMG and Eni S.p.A. signed the Joint Confirmation Agreement on initiation of the Zhanaozen hybrid power plant construction project. The project provides for construction of wind power plant (77 MW) and solar power plant (50 MW) in collaboration with Eni’s subsidiary Plenitude, as well as 120 MW gas power plant in Zhanaozen.
On 21 February 2024, KMG and Tatneft signed a purchase and sale agreement for 50% shares of Karaton Operating Ltd, a shareholder’s agreement and a financing agreement for the Karaton Subsalt project.
On 11 March 2024, KMG and SOCAR signed the Agreement on phased increase in the volumes of Kazakh oil transit across the territory of the Azerbaijan Republic and the Memorandum of Strategic Cooperation in Sale and Purchase of the Kazakh Oil.
On 29 March 2024, legal procedures related to Sinopec’s entry into the project for the construction of a polyethylene plant with a capacity of 1.25 million tonnes in the Atyrau region was completed, thus, the share of participants in the project: KMG – 40% (consolidated), SIBUR – 30%, Sinopec – 30%.
On 28 May 2024, following the results of the annual General Meeting of Shareholders of JSC NC KazMunayGas, Askhat Galimovich Khasenov was appointed Chairman of the KMG Management Board. As of August 2024, the Management Board of KMG consists of 10 people (Khasenov A.G. – Chairman of the Management Board, Iskaziyev K.O., Abdulgafarov D.Ye., Zakirov B.K., Lavrenov V.S., Makeyev D.S., Aryssova, D.A., Brekeshev S.A., Soyunov N. Dzh. and Balykbaev R.A.)
On 26 June 2024, KMG completed the payment of dividends to shareholders for 2023. The total amount of dividends was 300.0 bln tenge. The dividends per common share amounted to 491.71 tenge.

For further information, please visit https://www.kmg.kz/en/investors/reporting

Contacts: ir@kmg.kz, Tel: +7 (7172) 78 64 34

About JSC National Company KazMunayGas:

KMG’s main assets are as follows:

Upstream: Ozenmunaigas (OMG) – 100%, Embamunaigas (EMG) – 100%, KazakhTurkmunai (KTM) –100%, KazMunayTeniz – 100%, Urikhtau (UO) – 100%, Dunga – 60%, Ural Oil and Gas (UOG) – 50%, Mangistaumunaigaz (MMG) – 50%, Kazgermunai (KGM) – 50%, Karazhanbasmunai (KBM) – 50%, KazakhOil Aktobe (KOA) – 50%, PetroKazakhstan Inc (PKI) – 33%, Tengizchevroil (Tengiz) – 20%, Karachaganak – 10%, Kashagan – 16.88%.
Midstream: KazTransOil – 90%, Kazakhstan China Pipeline (KCP) – 50%, Munai Tas – 51%, Batumi Oil Terminal – 100%, Caspian Pipeline Consortium (CPC) – 20.75%, Kazmortransflot – 100%.
Downstream: Pavlodar refinery – 100%, Atyrau refinery – 99,53%, Shymkent refinery – 49,72%, Caspi Bitum – 50%, KMG International – 100%, Petromidia – 54,63%, Vega – 54,63%, KazRosGas – 50%, Kazakhstan Petrochemical Industries Inc – 49.5%.

^[1] The amounts were converted to US dollars for user convenience at average exchange rates for respective periods (average USD/KZT for the first half of 2024 and 2023 were at 449.09 and 451.80 respectively; period-end USD/KZT as of 30 June 2024 and 31 December 2023 were at 471.46 and 454.56 respectively.

^[3] Source: S&P Global Platts.

^[4] EBITDA = Revenue plus Share in profit of JVs and associates, net, minus Cost of purchased oil, gas petroleum products and refining costs minus Production expenses minus General and administrative expenses minus Transportation and Selling expenses minus Taxes other than income tax.

^[5] Adjusted EBITDA = Revenue plus Dividends from JVs and associates, minus Cost of purchased oil, gas petroleum products and refining costs minus Production expenses minus General and administrative expenses minus Transportation and selling expenses minus Taxes other than income tax.

^[6] Free Cash Flow = Net cash flow from operating activities minus Purchase of property, plant and equipment, intangible assets, investment property and exploration and evaluation assets. Dividends received from JVs and associates are included in cash flow from operating activities.

^[7] Total debt at the end of the reporting period = bonds plus loans (short-term and long-term). Guarantees issued are not included in the calculation.

^[8] Gross debt and Net debt are shown as of 31 December 2023.

^[9] Net debt at the end of the reporting period: Bonds plus loans minus cash and cash equivalents minus bank deposits (short-term and long-term). Guarantees issued are not included in the calculation.

^[10] Production results are stated in accordance with KMG's shareholdings in joint ventures and associates and 100% for consolidated subsidiaries. More detailed information is available in the press release on production results for the first half of 2024 at the link: https://www.kmg.kz/en/investors/reporting

^[11] Details are disclosed in the Company's financial statements for the relevant period.

Investor Day at KASE in an online format on the operational and financial results of JSC NC "KazMunayGas" for the first half of 2024

Thu, 15 Aug 2024 00:00:00 +0500

KASE will host an online Investor Day dedicated to the operational and financial results of JSC NC KazMunayGas (Company) for the first half of the year 2024 on 23 August 2024 at 15:00 Astana time / 10:00 GMT time / 06:00 EDT time.

The results of the reporting period will be presented by the Company's management.

To participate in the event, fill out the registration form at the link:

https://us06web.zoom.us/j/89110838827?pwd=6Ds6seaF6uGPo9NjZPLdQQeLj5kwZK.1

Dial-in details will be sent to you by email after the registration.

The Investor Day will be held for investors, professional participants in the securities market, media representatives and other interested parties.

Consolidated financial statements for the first half of 2024, financial press release and presentation will be published closer to the date of the event on the Company's website at:

https://www.kmg.kz/en/investors/reporting/

For questions, contact the Investor Relations Team

by tel. +7 (7172) 78 64 34, e-mail: ir@kmg.kz

About company:

JSC "National Company "KazMunayGas" is the leading vertically integrated oil and gas company in Kazakhstan. The company manages assets throughout the entire production cycle from exploration and production of hydrocarbons to transportation, refining and provision of specialised services. The company, founded in 2002, represents the interests of Kazakhstan in the country's oil and gas industry.

Сhairman of KazMunayGas meets with the management of LanzaJet in the USA

Wed, 07 Aug 2024 00:00:00 +0500

Chairman of the Management Board of JSC NC KazMunayGas (KMG) Askhat Khassenov during his business visit (August 5-7) to the United States held a meeting with the CEO of the American technology company LanzaJet Jimmy Samartzis. The parties discussed the matters of strategic partnership for the production of environmentally sustainable aviation fuel (SAF) in Kazakhstan.

Mr. Khassenov thanked LanzaJet for the invitation to the USA and the opportunity to tour the LanzaTech laboratory in Chicago. He noted that KMG aims to reduce its carbon footprint by 15% by 2031 compared to 2019 levels, and developing the country's biofuels market will support Kazakhstan's goal of carbon neutrality. "Currently, the global demand for SAF is increasing. Accordingly, our company is considering SAF production in Kazakhstan," said the Chairman of KazMunayGas.

In turn, CEO of LanzaJet Jimmy Samartzis emphasized the importance of Kazakhstan's initial steps towards producing environmentally friendly jet fuel and expressed readiness to provide full technological support. LanzaJet specializes in SAF production technology from ethanol ("ethanol-to-jet" or "alcohol-to-jet") and has long-term off-take agreements with major airlines. In January 2024, the company launched the world's first commercial-scale LanzaJet Freedom Pines Fuels plant for SAF production from ethanol.

A memorandum of cooperation was signed as a result of the visit.

For reference:

SAF (Sustainable Aviation Fuel) is a sustainable aviation fuel developed as an alternative to conventional jet fuel. It represents a promising tool for decarbonization of the aviation industry. SAF can be derived from bioethanol (ethanol), which is produced from plant and other renewable sources. It reduces carbon emissions by 80% compared to traditional jet fuel. Under the CORSIA program, the global aviation industry must limit total CO2 emissions to 2019 levels. The Nordic countries, Israel, the US and Australia are planning significant increases in the use of SAF by 2050. In Europe, all jet fuel must contain 2% SAF from 2025 onwards, and the use of eco-friendly jet fuel must rise to 63% by 2050.

JSC NC KazMunayGas 1H of 2024 Trading Update

Mon, 05 Aug 2024 00:00:00 +0500

National Company KazMunayGas JSC (“KMG” or “Company”), Kazakhstan's national oil and gas company, announces its operating results for the first half of 2024.

Key operating highlights for the first half of 2024 compared to the first half of 2023:

Oil and gas condensate production increased by 1.1% and amounted to 11,989 thous. tonnes;
Oil transportation volumes increased by 6.2% and amounted to 41,733 thous. tonnes;
Hydrocarbons refining volumes at the Kazakh and Romanian refineries amounted to 8,902 thous. tonnes compared to 10,109 thous. tonnes.

	1H 2024 (net to KMG)	1H 2023 (net to KMG)	%
Oil production, thous. tonnes	11,989	11,860	+1.1%
Gas production, mln m³	4,840	4,789	+1.1%
Oil transportation, thous. tonnes	41,733	39,309	+6.2%
Oil refining, thous. tonnes	8,902	10,109	-11.9%

Upstream

Oil and gas condensate production volume for the first half of 2024 amounted to 11,989 thous. tonnes (497 kbopd) representing an increase of 1.1%. Production volume of associated and natural gas (before the volumes of reinjection) raised by 1.1% to 4,840 mln m³.

Oil and condensate production, thous. tonnes	1H 2024 (net to KMG)	1H 2023 (net to KMG)	%
OMG	2,510	2,474	+1.4%
MMG	1,530	1,538	-0.6%
EMG	1,371	1,325	+3.5%
Tegniz	2,872	2,981	-3.7%
Kashagan	1,539	1,536	+0.2%
Karachaganak	547	549	-0.3%
Others	1,620	1,457	+11.2%
Total	11,989	11,860	+1,1%

Oil production at Tengiz decreased by 3.7% and amounted to 2,872 thous. tonnes (126 kbopd). Associated gas production narrowed by 4.2%, amounting to 1,587 mln m³. The decrease in indicators was due to overhaul at sour gas injection facility in May of the reporting year.

KMG's share of oil production at Kashagan amounted to 1,539 thous. tonnes (67 kbopd), showing an increase of 0.2%. Gas increased by 2% and amounted to 996 mln m³. The stable performance was due to the reliable operation of technological equipment at the production facilities of the field.

Oil and condensate production at Karachaganak decreased by 0.2% and amounted to 547 thous. tonnes (24 kbopd). The reasons for the slight reduction in liquid hydrocarbon production were the reduction in supplies of unstable condensate to JSC “Condensate” and the restriction of gas intake from the Orenburg Gas Processing Plant. At the same time, gas production increased by 5.8% and amounted to 1,173 million m³ due to the depletion of the field and the increase in the volume of gas in the produced gas-liquid mixture.

Oil and condensate production at operating assets increased by 3.5% to 7,031 thous. tonnes (280 kbopd). The growth was due to the newly acquired Dunga field, geological and technical activities related to drilling, capital repairs of wells and hydraulic fracturing at Embamunaigas fields, as well as a decrease in emergency power outages by the Mangystau Nuclear Power Plant in the reporting half-year compared to the same period last year. At the same time, oil production at mature fields of the Kumkol group continues to decline due to natural depletion of reserves. Gas production at operating assets increased by 3.5% to 1,084 million m³ due to the development of the new gas condensate field, Rozhkovskoye (Ural Oil and Gas), and the newly acquired Dunga field. At the same time, gas production decreased at Vostochny Saztobe field (Kazakhturkmunai) due to geological and technical activities being carried out at 2 gas condensate wells.

Midstream

The total volume of oil trunk pipelines and sea transportation increased by 6.2% to 41,733 thous. tonnes.

Oil transportation¹, thous. tonnes	1H 2024 (100%)	1H 2024 (net to KMG)	1H 2023 (net to KMG)	%
KazTransOil	22,265	22,265	21,353	+4.3%
Kazakhstan-China Pipeline	9,127	4,563	4,644	-1.7%
MunaiTas²	2,735	1,395	1,393	+0.1%
Caspian Pipeline Consortium	33,210	6,891	6,684	+3.1%
Kazmortransflot	6,618	6,618	5,235	+26.4%
Total	-	41,733	39,309	+6.2%
¹Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation. ²MunaiTas is an equity-consolidated joint venture and transportation volumes are quoted at a 51% ownership interest.

The volume of oil transportation through main pipelines increased by 3.1% and amounted to 35,115 thous. tonnes. The increase was due to the growth of transshipment of Kashagan oil through the KazTransOil and Caspian Pipeline Consortium systems.

In the reporting period, the volume of marine transportation increased by 26.4%, reaching 6,618 thous. tonnes. The growth was due to an increase in the transportation of oil through the Baku-Tbilisi-Ceyhan oil pipeline, which ships oil to the Mediterranean Sea, as well as an increase in volumes along the Aktau-Makhachkala and Aktau-Baku routes in the Caspian Sea. At the same time, there was a decrease in transportation volumes through the Black Sea, which is explained by overhaul at the Petromidia plant and NATO military exercises.

Trading

Sales volumes of KMG's own produced oil and gas condensate decreased by 0.4% and amounted to 12,114 thous. tonnes, of which 65.4% was exported.

Supplies of own produced oil and gas condensate volumes to cover the needs of the domestic market amounted to 4,194 thous. tonnes, including deliveries of crude oil from operating assets (Ozenmunaigas, Embamunaigas, Kazakhturkmunai) in the amount of 2,648 thous. tonnes to Atyrau, Pavlodar and Shymkent refineries for further oil refining and sales of oil products.

Downstream

Hydrocarbon refining, thous. tonnes¹	1H 2024 (net to KMG)	1H 2023 (net to KMG)	%
Atyrau refinery	2,911	2,881	+1.0%
Pavlodar refinery	2,722	2,772	-1.8%
Shymkent refinery	1,256	1,380	-9.0%
Caspi Bitum	165	201	-17.9%
Petromidia	1,731	2,681	-35.5%
Vega	117	193	-39.3%
Total	8,902	10,109	-11.9%
¹Shymkent refinery and Caspi Bitum refining volumes are indicated at a share of 50%, other refineries — 100%. The decrease in refining volume compared to the first half of 2023 was mainly due to the shutdown for overhaul at the refineries in Romania (Petromidia, Vega), as well as a slight reduction in refining volumes at Kazakhstan refineries (at Shymkent refinery due to a major overhaul in April 2024, and at Caspi Bitum due to weak requested volumes for bitumen from road construction companies).

The total volume of hydrocarbon processing compared to the same period in 2023 decreased by 11.9% and amounted to 8,902 thous. tonnes.

The volume of hydrocarbon processing at Kazakhstan's refineries decreased by 2.5% and amounted to 7,054 thous. tonnes due to a longer-than-expected planned overhaul at Shymkent refinery compared to 2023 (a major overhaul was conducted in 2024, while in 2023 it was a routine maintenance). The processing volumes at Caspi Bitum decreased due to weak requested volumes for bitumen from road construction companies during the reporting period.
The volume of processing at the KMG International plants (Petromidia, Vega) in Romania dropped by 35.7% and amounted to 1,848 thous. tonnes. The reduction in processing volumes occurred due to the late launch of the soft hydrocracking unit at Petromidia refinery and the shutdown of the plant for scheduled major overhaul in March of this year. The restart of the plant was completed in early June, at the moment it is operating in the normal mode at full capacity.

The volume of oil product production at Kazakh and Romanian refineries decreased by 11.1% and amounted to 8,283 thous. tonnes.

Kazakhstani refineries produced 6,465 thous. tonnes of oil products, which is 0.8% less than the first half of 2023 due to a corresponding decrease in refining volumes at the refineries by 2.5%.
Oil products production at KMG International refineries (Petromidia, Vega) was less than last year by 35.0% and amounted to 1,818 thous. tonnes compared to 2,796 thous. tonnes due to a corresponding decrease in refining volumes at the refineries.

For further information, please visit https://www.kmg.kz

Contacts: email: ir@kmg.kz, tel: +7 7172 78 64 34

About JSC National Company KazMunayGas:

KMG’s main assets are as follows:

Upstream: Ozenmunaigas (OMG) — 100%, Embamunaigas (EMG) — 100%, KazakhTurkmunai (KTM) — 100%, KazMunayTeniz — 100%, Urikhtau (UO) — 100%, Dunga — 60%, Ural Oil and Gas (UOG) — 50%, Mangistaumunaigaz (MMG) — 50%, Kazgermunai (KGM) — 50%, Karazhanbasmunai (KBM) — 50%, KazakhOil Aktobe (KOA) — 50%, PetroKazakhstan Inc (PKI) — 33%, Tengizchevroil (Tengiz) — 20%, Karachaganak — 10%, Kashagan — 16.88%.
Midstream: KazTransOil — 90%, Kazakhstan China Pipeline (KCP) — 50%, Munai Tas — 51%, Batumi Oil Terminal — 100%, Caspian Pipeline Consortium (CPC) — 20.75%, Kazmortransflot — 100%.
Downstream: Pavlodar refinery — 100%, Atyrau refinery — 99,53%, Shymkent refinery — 49,72%, Caspi Bitum — 50%, KMG International — 100%, Petromidia — 54,63%, Vega — 54,63%, KazRosGas — 50%, Kazakhstan Petrochemical Industries Inc — 49.5%.

KazMunayGas announces the following changes in the company's management

Mon, 29 Jul 2024 00:00:00 +0500

Ruslan Balykbaev has been appointed Deputy Chair of the Management Board of NC KazMunayGas JSC. He has taken the charge of the major projects area.

R.Balykbaev graduated from the Kazakh-British Technical University with a degree in Oil and Gas Field Development, and the Polytechnic University of Turin with a Master's degree in Petroleum Engineering.

From 2013 to 2024, R.Balykbaev held various positions at PSA LLP: a manager, chief manager, department director, general manager for the North Caspian project (member of the Management Board). For special merits in his work, he has been awarded a state award - the Yeren enbegi ushin medal, as well as the Munai-gaz salasynyn enbek sinirgen qyzmetkeri badge. Since 2019, he has been a member of the Presidential Youth Personnel Pool.

KMG and SOCAR strengthening their partnership

Thu, 25 Jul 2024 00:00:00 +0500

Askhat Khassenov, Chief Executive Officer of NC KazMunayGas JSC (KMG), during his visit to Baku on July 24-26, met with the President of State Oil Company of the Azerbaijan Republic (SOCAR) Rovshan Najaf to hold negotiations.

The parties mainly discussed key cooperation issues. In 2022, we should remind, KMG and SOCAR signed a five-year Aktau-Baku-Ceyhan Oil Transit Agreement for transportation of the annual 1.5 million tons of crude oil.

Stable supply of Kazakh oil was noted at the meeting as well. In 2023, the amount of oil shipped from the port of Aktau was 1.057 million tons, and in the first half of this year this indicator was more than 700 thousand tons.

As Mr. A. Khassenov noted KazMunayGas has a goal to further develop this export route. Currently, KMG together with its partners is studying the options to increase the supplies of Kazakh oil through the Trans-Caspian route.

Chief Executive Officer expressed his confidence in the two companies' joint initiatives success.

Additionally, at the meeting the parties discussed the prospects of cooperation in the field of decarbonization.

Mr. A. Khassenov, during his stay in Baku, studied the operations of the BP Sangachal and Azertrans terminals involved in the transit of Kazakh oil. He also boarded the AKTAU Kazakh tanker, where he met and talked with the crew members.

For information:

National Company KazMunayGas JSC (KMG) is a leading vertically integrated Kazakh oil and gas company. KMG owns assets across the entire production cycle from exploration and production of hydrocarbons to transportation, refining and specialized services. The Company founded in 2002 represents interests of Kazakhstan in the oil and gas industry.

State Oil Company of Azerbaijan Republic (SOCAR) – a global energy company with the headquarter in Azerbaijan – specializes in the energy resources production, processing and marketing. The company has a wide global footprint as the largest integrated energy company in the South Caucasus region

KMG, Eni begin construction of hybrid power plant in Zhanaozen

Tue, 16 Jul 2024 00:00:00 +0500

NC KazMunayGas JSC (KMG) and Eni S.p.A. (Eni), Italian energy company, have begun construction of a hybrid power plant with a capacity of 247 MW in Zhanaozen, which will run on solar, wind and gas energy.

On July 16, an inauguration ceremony for the future hybrid power plant took place in Zhanaozen with the participation of Askhat Khassenov, the Chairman of the Management Board of NC KazMunayGas JSC, Seger Hoytink, Country Chair of Eni in Kazakhstan, Vice Minister of Energy Sungat Yessimkhanov, Chairman of the Committee on Ecology and Environmental Management of the Mazhilis of Parliament Yedil Zhanbyrshin and Deputy Akim of Mangystau region Abbat Orisbayev.

The hybrid project involves the combined generation of electricity from renewable energy sources (wind and solar), developed by Eni Plenitude, and a gas power plant to balance and to stabilize the electricity production, leveraging Eni’s international industrial expertise.

The capacity of the solar power plant will be 50 MW, wind power will be 77 MW, and gas power will be 120 MW. The hybrid power plant will ensure stable and reliable electricity supply to KMG's subsidiary companies in the region, including Ozenmunaygas and Kazakh gas processing plant. This will eliminate the risks of production shutdowns due to frequent power supply interruptions.

During the construction phase, up to 800 workers will be employed, and during operation, up to 70 personnel will be involved. The investment will be provided by KMG and Eni on a parity basis.

The project also contributes to the implementation of KMG's decarbonization strategy and reduction of its carbon footprint in line with the company's strategic goals. Approximately 40% of all electricity produced by the hybrid project will be fully "green," significantly reducing carbon dioxide emissions.

"Such a hybrid project will be implemented in Kazakhstan for the first time. The hybrid power plant will ensure stable and reliable electricity supply to KMG's oil-producing companies and the gas processing plant in the region. The project leverages Eni's international industrial experience and represents an innovative combination of various technologies. It is also aimed at diversifying and decarbonizing the energy supply in the Mangystau region. Additionally, the project will create new employment opportunities for highly skilled professionals in the region," noted Askhat Khassenov, the Head of KMG.

KMG and China's CVC to cooperate in the field of waste management

Tue, 02 Jul 2024 00:00:00 +0500

NC KazMunayGas JSC (KMG) and China Venture Capital (CVC) have signed a Memorandum of Understanding in the field of hazardous waste recycling and disposal.

The document was signed by Askhat Khassenov, Chairman of the Management Board of NC KazMunayGas JSC and Sun Yang, Senior Advisor to China Venture Capital (CVC).

The parties agreed to cooperate in exploring the possibilities of processing and neutralizing hazardous waste (oil sludge) through pyrolysis, generated during the operation of KMG's and its subsidiaries’ oil fields.

Background:

China Venture Capital Company, Limited was founded in January 1985 and is a holding subsidiary of CITIC Capital Holdings Limited, which is part of the CITIC Group. The company operates in four main areas: fund management; renewable energy and ecology; high technology and innovation; and supply chain services.

KMG, SIBUR and Sinopec signed a protocol among shareholders in relation to project Silleno

Tue, 02 Jul 2024 00:00:00 +0500

On July 2, in Astana, during the 7th meeting of the Kazakh-Chinese Business Council, NC KazMunayGas JSC (KMG), SIBUR Holding PJSC, and Sinopec Overseas Investment Holding signed a Protocol among shareholders in relation to project Silleno.

The parties confirmed their intention to align the final investment budget to execute project "Silleno" – the construction of the first integrated gas chemical complex for polyethylene production with a capacity of 1.25 million tons in Atyrau region.

The document was signed by Askhat Khassenov, Chairman of the Management Board of NC KazMunayGas JSC, Mikhail Karisalov, Chairman of the Management Board – CEO of SIBUR LLC and Yongsheng Ma, Chairman of the Board of Directors of Sinopec.

In addition, the Protocol outlines the parties' commitment to ensuring the highest possible level of Kazakhstani content in the design, procurement of equipment and materials, and construction during the implementation of the project, taking into account economic and technical feasibility.

The polyethylene production project is a crucial stage in the development of the petrochemical industry. Its implementation will have a multiplier effect on the country's economy, leading to an expected GDP increase of 1.2% and creating new opportunities for small and medium-sized businesses in the production of polyethylene products. Every dollar invested in the petrochemical industry ultimately boosts the country's economy by 2-3 dollars.

In total, approximately 8,000 new jobs are planned to be created during the construction stage, and around 800 more during the plant operation stage.

Polyethylene is a versatile polymer used in the production of numerous products, including pipes, construction and packaging materials, automotive components, medical equipment, and other goods widely utilized in everyday life and various industries.

Background:

National Company KazMunayGas JSC (KMG) is Kazakhstan's leading vertically-integrated oil and gas company. KMG is managing assets throughout the entire production cycle, ranging from exploration and production of hydrocarbons to transportation, refining and provision of specialized services. The company, founded in 2002, represents Kazakhstan in the country's petroleum sector.

SIBUR Holding PJSC (SIBUR) is one of the most dynamically developing companies in the global petrochemical industry and the Russian leader in the production of polymers and rubbers. In March 2023, SIBUR officially joined the Polyethylene project.

Sinopec is a vertically integrated energy and petrochemical corporation and the second-largest chemical company in the world, following BASF. In March 2024, Sinopec officially became a member of the project.

Sileno LLP is the operator of the second phase of the construction project for the first integrated gas chemical complex in the Atyrau region (the Polyethylene Project). The partnership is a participant in the special economic zone "National Industrial Petrochemical Technopark," where the project is being implemented.

Askhat Khassenov held talks with Chairman of the Board of Directors of CNPC Dai Houliang

Mon, 01 Jul 2024 00:00:00 +0500

Chairman of the Management Board of JSC NC KazMunayGas Askhat Khassenov held negotiations with Chairman of the Board of Directors of CNPC Dai Houliang.

The parties discussed the activities of joint production assets in the Mangistau and Kyzylorda regions, prospects for cooperation in the field of geological exploration and opportunities for further processing of gas.

Taking into account the importance of the accelerated launch of gas projects in Kazakhstan, the parties are exploring opportunities for processing hydrocarbons from the Central Urikhtau field at the Zhanazhol oil and gas refining complex.

In addition, negotiations parties spoke positively about the activities of the annual Kazakh-Chinese technical seminars on the exchange of technologies for exploration and development of oil and gas fields. This year the technical seminar to be held in Kyzylorda.

NC KazMunayGas JSC paid dividends for 2023

Fri, 28 Jun 2024 00:00:00 +0500

«NC «KazMunayGas» JSC (hereinafter referred to as KMG) hereby informs about the payment of dividends on the KMG’s shares for the year 2023:

dividend payment date – June 26, 2024;

the total amount of dividends to be paid to shareholders – 300,001,855,903.03 (three hundred billion one million eight hundred fifty-five thousand nine hundred three) tenge 3 (three) tiyn;

the total amount of dividends actually paid to shareholders – 300,001,855,903.03 (three hundred billion one million eight hundred fifty-five thousand nine hundred three) tenge 3 (three) tiyn;

the period for which dividends were paid – 2023;

dividend amount per common share – 491.71 (four hundred ninety-one) tenge 71 (seventy-one) tiyn;

holder record date and time – 0.00 a.m. on May 29, 2024.

The dividend payment was carried out based on the resolution of the General Meeting of Shareholders of KMG No. 1/2024 dated May 28, 2024.

The heads of KMG and Eni in Kazakhstan discussed the cooperation agenda

Thu, 20 Jun 2024 00:00:00 +0500

Chairman of the Management Board of JSC NC "KazMunayGas” Askhat Khassenov met with the Chairman and Managing Director of Eni in Kazakhstan Seger Hoytink.

The parties discussed the current status of Kashagan’s expansion phases, the construction of a gas processing plant at Karachaganak to supply commercial gas to the domestic market and increasing Kazakhstani content.

Other topics of the meeting included the status of the ongoing preparation activities for the drilling of the Abay well planned to be spud in the coming period, as well as the prospects for oil exports via the Trans-Caspian route and through the Transneft system to oil refineries in Germany.

In addition, the meeting also addressed the project for constructing a Hybrid Power Plant in Zhanaozen. KMG and Eni plan to complete the procedures for creating two joint ventures (for renewable energy sources and for the gas power plant) shortly.

As Mr. Khassenov noted, Eni is a strategic partner for the entire energy industry of the country. KMG intends to continue to strengthen cooperation with the company both on current projects and new initiatives.

KMG and Hyundai Engineering agreed to cooperate in the oil and gas industry

Wed, 12 Jun 2024 00:00:00 +0500

On 12th of June, in Astana NC KazMunayGas JSC signed a Cooperation Agreement with Hyundai Engineering, South Korean EPC engineering company.

The parties agreed to cooperate in the oil, gas and petrochemical industries.

The document was signed by Askhat Kassenov, the Chairman of the Board of KMG and Hyeon Sung Hong, President of Hyundai Engineering.

The agreement provides for exploring opportunities for cooperation in the oil, gas, and petrochemical sectors. It also includes provisions for technology exchange, specialist training, and the transfer of technical knowledge and experience.

Background:

Hyundai Engineering Co., Ltd. is a South Korean EPC contractor with significant expertise in providing total solutions throughout the entire life cycle of projects. This includes feasibility and conceptual studies in the early stages, FEED, engineering, procurement, construction, and commissioning during project execution. The company also provides industry-leading services in project management, integration, technical services, operation and maintenance, technical audits, and rehabilitation of facilities related to refinery, gas processing, petrochemical, fertilizer, and renewable energy projects.

Voting results of the annual General Meeting of Shareholders of NC «KazMunayGas» JSC

Mon, 10 Jun 2024 00:00:00 +0500

National Company “KazMunayGas” JSC (hereinafter – NC “KazMunayGas” JSC, KazMunayGas, KMG or the Company) publishes the results of the voting of the annual General Meeting of Shareholders held on 28 May 2024 (hereinafter – «AGM»).

According to the list of KMG shareholders entitled to participate and vote at the AGM, the number of shares was 610,063,688. Shareholders (and/or their authorized representatives) who in total owned 476,899,875 common shares of the Company registered to participate in the AGM, which is 78. 17% of the total voting shares of KMG.

A vote of shareholders was held on the issue included in the agenda of the AGM meeting and decisions were made.

AGM agenda	For	%
1. On approval of the annual financial statements of JSC NC “KazMunayGas” for 2023.	476 899 875	100%
2. On the procedure for distributing the net income of JSC NC “KazMunayGas” for 2023 and the amount of dividend per one common share of NC KazMunayGas JSC.	476 899 875	100%
3. On appeals from shareholders regarding the actions of NC “KazMunayGas” JSC and its officials in 2023 and the results of their consideration.	476 899 875	100%
4. On approval of the Corporate Governance Code of the joint stock company “National Company “KazMunayGas” in a new edition.	476 899 875	100%
5. On the determination of an audit organization to audit the financial statements of NC “KazMunayGas” JSC for 2025 - 2029.	476 899 875	100%
6. On introducing changes to the composition of the Counting Commission of the general meeting of shareholders of JSC NC “KazMunayGas”.	476 899 875	100%
7. About some issues of NC “KazMunayGas” JSC.	476 899 875	100%
8. On introducing amendments and additions to the Charter of the joint stock company “National Company “KazMunayGas”, approved by the decision of the General Meeting of Shareholders of JSC NC “KazMunayGas” dated May 30, 2023 (minutes No. 2\2023, issue No. 5)	476 899 875	100%

Decision on the payment of dividends based on the results of 2023

The shareholders, guided by the dividend policy of the Company and the recommendation of the Board of Directors, based on the audited financial indicators for 2023, approved the amount of dividend per common share of JSC NC KazMunayGas in 491.71 tenge (Four hundred ninety-one tenge seventy-one tiyn), paid from profit for 2023. Thus, the total amount of dividends will be about 300 billion tenge.

Payment of dividends based on the results of 2023 will be carried out from June 24, 2024 to persons registered in the register of shareholders as of May 29, 2024 00 hours 00 minutes local time (GMT +5).

On the Chairman of the Management Board and the composition of the Board of Directors of JSC NC KazMunayGas

Based on the results of the AGM vote, the powers of Magzum Maratovich Mirzagaliev as Chairman of the Board of JSC NC KazMunayGas and a member of the Board of Directors of JSC NC KazMunayGas were terminated early. Askhat Galymovich Khasenov was elected as the new Chairman of the Management Board and member of the Board of Directors of JSC NC KazMunayGas.

Askhat Khasenov graduated from the Kazakh National Technical University named after Kanysh Satpayev with a degree in Oil and Gas Well Drilling, and the University of International Business with a degree in Management.

Askhat Khasenov began his career in 2005 as an operator of the 3rd category of the oil and gas production workshop of Turgai Petroleum JSC (Kyzylorda).

In 2006-2010, he worked at the Main Dispatch Directorate of the Oil and Gas Industry JSC: leading, chief specialist, head of the oil and gas field development monitoring department, deputy director, department director, vice president.

In 2011-2019, he continued his career at the Ministry of Oil and Gas of the Republic of Kazakhstan, where he headed the department of state inspection and issuance of permits of the State Inspection Committee in the oil and gas complex, and then the department of petrochemicals and technical regulation.

From 2019 to 2022, he served as Deputy Chairman of the Board of KLPE LLP.

Before his appointment to JSC NC KazMunayGas in 2022-2024, he was Vice Minister of Energy of the Republic of Kazakhstan. In this position, he oversaw issues of subsoil use and the development of petrochemicals, and also headed the Central Commission for the exploration and development of hydrocarbon fields.

Mr. Khasenov declares that the there is no information for disclosure specified in subparagraphs d), e), f) and g) of paragraph 2.6 of Table 1 of the AIX Market Disclosure Rules and in subparagraphs d), e), f) and g) of paragraph 1.6 of the Guide to continuing obligations of companies admitted to the AIX official list.

On introducing amendments and additions to the Charter of JSC NC KazMunayGas

Following the meeting, the General Meeting of Shareholders decided to vote “for” the introduction of amendments and additions to the Charter of JSC NC KazMunayGas. These changes and additions relate to the location of the Company (its Management Board) and the redistribution of powers of the General Meeting of KMG Shareholders to appoint (elect) and early terminate the powers of the Chairman of the KMG Management Board in favor of the KMG Board of Directors.

The need to make changes and additions to the KMG Charter is due to a change in numbering in the state database "Real Estate Register" of the NJSC "State Corporation "Government for Citizens", as well as the redistribution of the competence of the General Meeting of KMG Shareholders for the appointment (election) and early termination of powers of the Chairman of the KMG Management Board to the Board of Directors of KMG, for the purpose of efficiency and variability in making such decisions.

KazMunayGas published its 2023 Sustainable Development Report

Thu, 30 May 2024 10:10:00 +0500

KazMunayGas annually publishes its Sustainable Development Report, which informs about the Company's progress under the United Nations Global Compact and the Company's progress in achieving the global Sustainable Development Goals.

In May this year, KMG Board of Directors approved the verified 2023 Sustainable Development Report. The Report was prepared in accordance with the updated GRI Standards 2021 – international sustainability reporting standards – and passed the procedure of independent confirmation by an audit company.

KMG's sustainable business model is based on ESG-aspects - environmental responsibility, social support and effective management of corporate behaviour. In today's world, ESG-indicators are becoming increasingly vital for the success of companies in all industries.

The concept of “ESG-CODE” Report reflects this new reality as it presents ESG principles not just as a set of external requirements, but as a fundamental part of a Company's DNA.

The Report discloses key indicators of economic, environmental and social performance for the period from 2021 to 2023 and includes information about activities on material aspects of sustainable development: air and water protection, industrial safety and labour protection, environmental protection, human resources development, and interaction with local communities.

We understand the importance of our stakeholders' interests and we annually monitor the feedback to the Report. This practice helps us to improve the content of our Report and to raise awareness of the Company's sustainable development issues among the employees and other stakeholders.

The Sustainable Development Report and the Annual Report are available at the following link: https://www.kmg.kz/ru/investors/reporting/

KazMunayGas starts deep exploration drilling operations on the Torgai Paleozoic site

Thu, 30 May 2024 10:00:00 +0500

KazMunayGas started drilling of the PZ-1 exploration well 5,500 metres deep at the Torgai Paleozoic structure in the Kyzylorda region.

KazMunayGas as a national company is focusing on its strategic goal to replenish and develop the reserve base, including in the Kyzylorda region. In case of successful drilling, the project will build up a reserve potential of the Republic of Kazakhstan.

Drilling operations of the same depth have never been conducted earlier in this region. Deep sediments exploration projects are challenged by an unpredictable geological profile, potentially high pressures and temperatures, and presence of hydrogen sulphide as well as other factors.

A professional team was built of 30 people (KMG Project Team) to deliver the Project. Specialists of service companies – about 40 people, professionals and drilling crew – 70 people were recruited as well.

A (100%) subsoil user of the project is NC KazMunayGas JSC.

KMG and JOGMEC signed a Memorandum of Cooperation in oil exploration and production

Wed, 29 May 2024 00:00:00 +0500

JSC NC KazMunayGas (KMG) and Japan Organization for Metals and Energy Security (JOGMEC) signed a memorandum of cooperation on the oil and natural gas upstream sector.

The document was signed by Askhat Khassenov, Chairman of the Board of JSC NC KazMunayGas, and Mori Hiroyuki, Executive Vice President of the JOGMEC.

"We are confident that this memorandum of cooperation will serve as a catalyst for enhanced collaboration between our organizations, paving the way for new opportunities in hydrocarbon exploration and production," remarked A.Khassenov.

In addition, both parties have affirmed their commitment to human resource development. This includes initiatives such as knowledge exchange, sharing of experiences, and technology transfer between KMG and JOGMEC.

Background:

Japan Organization for Metals and Energy Security (JOGMEC) is a national corporation supporting Japanese private companies involved in exploration, development and production of oil and natural gas resources through financial, informational and technical assistance in order to contribute to secure the stable supply of energy to Japan. The company has 13 international offices in 12 countries. Since 1979, JOGMEC (formerly known as Japan National Oil Corporation, JNOC) has conducted 70 geological and geophysical surveys in 30 countries.

JSC NC KazMunayGas announces financial results for the first quarter of 2024

Fri, 24 May 2024 00:00:00 +0500

Joint-stock National Company KazMunayGas (“KMG” or Company), Kazakhstan's national oil and gas company, published its interim condensed consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) 34 "Interim Financial Statements" for the three months ended on 31 March 2024, with an independent auditor’s report on the results of the review of interim financial information.

Key financial indicators for the first quarter of 2024^[1] compared to the first quarter of 2023:

Revenue amounted to 2,227 bln tenge (USD 4,948 mln) compared to 1,887 bln tenge (USD 4,149 mln);
EBITDA amounted to 548 bln tenge (USD 1,218 mln) compared to 550 bln tenge (1,210 mln);
The Company's net profit including share in income of joint ventures and associates amounted to 300 bln tenge (USD 667 mln) compared to 287 bln tenge (USD 631 mln);
Net profit adjusted for share in profit of joint ventures and associates^[2] amounted to 201 bln tenge (USD 446 mln) compared to 96 bln tenge (USD 210 mln);
Free cash flow amounted to 144 bln tenge (USD 320 mln) compared to minus 53 bln tenge (USD minus 116 mln);
Gross debt as of 31 March 2024 amounted to 3,971 bln tenge (USD 8,889 mln) compared to 3,757 bln tenge (USD 8,265 mln) as of 31 December 2023;
The Company's net debt as of 31 March 2024 was at 1,748 bln tenge (USD 3,912 mln) compared to 1,645 bln tenge (USD 3,620 mln) as of 31 December 2023.

Name of the indicator	UoM	3M 2024	3M 2023	%
Dated Brent^[3], average	$/bbl	83.16	81.17	2.5%
Dated Urals^[3], average	$/bbl	71.06	51.32	38.5%
KEBCO^[3], average	$/bbl	82.17	77.96	5.4%
Exchange rate, average	KZT/USD	450.18	454.82	-1.0%
Revenue	bln tenge	2,227	1,887	18.0%
Share in profit of JVs and associates, net	bln tenge	154	192	-19.5%
Dividends received from JVs and associates, net	bln tenge	55	0.25	21,825.6%
Net profit	bln tenge	300	287	4.7%
Net profit adjusted for the share in profit of JVs and associates	bln tenge	201	96	110.3%
EBITDA^[4]	bln tenge	548	550	-0.4%
Adjusted EBITDA^[5]	bln tenge	449	359	25.1%
CAPEX (accrual basis)	bln tenge	112	151	-25.6%
CAPEX (cash basis)	bln tenge	126	189	-33.0%
Free cash flow^[6]	bln tenge	144	-53	372.3%
Gross debt^[7]	bln tenge	3,971	3,757^[8]	5.7%
Net debt^[9]	bln tenge	1,748	1,645^[8[	6.2%

Operating results for the first quarter of 2024^[10] compared to the first quarter of 2023:

The volume of oil and gas condensate production increased by 1.7% and amounted to 6,064 thous. tonnes;
Oil transportation volumes increased by 14.2% and amounted 21,541 thous. tonnes;
The volume of refining of hydrocarbons at Kazakhstani and Romanian refineries amounted 4,626 thous. tonnes compared to 4,936 thous. tonnes.

	3M 2024 (net to KMG)	3M 2023 (net to KMG)	%
Oil production, thous. tonnes	6,064	5,961	+1.7%
Gas production, mln m³	2,522	2,410	+4.6%
Oil transportation, thous. tonnes	21,541	18,858	+14.2%
Oil refining, thous. tonnes	4,626	4,936	-6.3%

Financial Highlights for the first quarter of 2024

Revenue

Revenue amounted to 2,227 bln tenge (USD 4,948 mln), which is 18.0% higher than in the first quarter of 2023, mainly due to an increase in the volume of oil sales as well as an increase in the average price of Brent crude oil by 2.5%.

Share in profit of joint ventures and associates

The share in income of joint ventures and associates decreased by 19.5% and amounted to 154 bln tenge (USD 343 mln) mainly as the result of a decrease in profits of “Tengizchevroil” LLP by 41.3 bln tenge (USD 89 mln) due to an increase in depreciation costs due to launch of new WPMP and FGP facilities.

EBITDA

EBITDA for the first quarter of 2024 compared to the same period in 2023 remained practically unchanged, amounting to 548 billion tenge (USD 1,218 million).

Adjusted EBITDA

Adjusted EBITDA reflecting dividends received from joint ventures and associates instead of share in income of joint ventures and associates amounted to 449 bln tenge (USD 997 mln), showing a growth of 25.1%.

Net profit

The Company's net profit increased by 4.7% compared to the first quarter of 2023 and amounted to 300 billion tenge (USD 667 million).

Net profit adjusted for share in profit of JVs and associates

Net profit adjusted for the share in profit joint ventures and associates increased by 110.3% from 96 bln tenge (USD 210 mln) to 201 bln tenge (USD 446 mln).

Cost of purchased oil, gas, oil products and other materials

The cost of purchased oil, gas, oil products and other materials in the reporting period increased by 22.7% and amounted to 1,266 bln tenge (USD 2,812 mln). The increase in cost was largely due to an increase in the cost of purchased oil for resale due to an increase in purchase volumes, as well as due to an increase in the average price of oil.

Operating expenses

Operating expenses increased by 26% and amounted to 328 bln tenge (USD 729 mln) mainly due to the indexation of wage costs for production workers in the regions of presence as well as an increase in transportation costs.

Transportation and distribution costs amounted to 67 bln tenge (USD 148 mln), up 8.7% compared to the first quarter of 2023. The growth was due to an increase in the volume of oil sales by KMG International, as well as the inclusion of Dunga Operating GmbH in KMG's consolidation perimeter since November 2023.

General and administrative expenses increased by 18.9% and amounted to 40 bln tenge (USD 88 mln). The growth is associated with an increase in salary costs and other expenses.

Taxes other than income tax decreased by 6% and amounted to 133 bln tenge (USD 296 mln) mainly due to decrease in rent tax on crude oil exports.

Capital expenditures

The Company's capital expenditures accrual basis (disclosed in the Note “Segment reporting”) amounted to 112 bln tenge (USD 249 mln), a decrease of 25.6% mainly due to the completion of the replacement of the Uzen-Atyrau-Samara pipeline section, as well as the completion of reconstruction and expansion of the Astrakhan-Mangyshlak main water pipeline.

Dividends received from JVs and associates

Dividends received from joint ventures and associated companies amounted to 55 bln tenge (USD 122 mln) compared to 0.25 bln tenge (USD 0.55 mln). This deviation is mainly caused by different payment frequency of dividends of “Tengizchevroil” LLP in the reporting period and last year. The increase was mainly due to dividends paid by “Tengizchevroil” LLP in the amount of 38.2 bln tenge (USD 85 mln) and by Mangistaumunaigas JSC in the amount of 13.5 bln tenge (USD 30 mln).

Free cash flow

Free cash flow increased in comparison with the first quarter of 2023 by 372.3% and amounted to 144 bln tenge (USD 320 mln). The increase was associated with a growth in oil sales volumes, an increase in dividends received from joint ventures and associated companies, as well as with a decrease in capital expenditures.

Debt management

Debt indicators

Name of the indicator	UoM	31 March 2024	31 Dec 2023	%
Bonds	bln tenge	3,259	3,046	7.0%
Loans	bln tenge	712	711	0.2%
Gross debt	bln tenge	3,971	3,757	5.7%

Numbers may not add up due to a rounding.

Total debt as of 31 March 2024 amounted to 3,971 bln tenge (USD 8,889 mln), an increase in tenge by 5.7% and by 7.5% in US dollar terms compared to 31 December 2023 mainly due to an increase from 3% to 9.3% on the coupon rate of the bonds issued by KMG in favor of Samruk-Kazyna JSC in 2022^[11].

As at 31 March 2024, KMG International received a loan from NATIXIS in the amount of USD 89.5 mln (equivalent to 40.3 bln tenge) and a loan from ING bank in the amount of USD 23.7 mln (equivalent to 10.7 bln tenge) for the working capital financing.

The increase in total debt was offset by the partial repayment of the syndicated loan by KMG International in the amount of USD 46.1 mln (equivalent to 20.8 bln tenge) and the loan from Cargill in the amount of USD 52.0 mln (equivalent to 23.4 bln tenge). Also, in the reporting period, Atyrau refinery partially repaid Halyk bank loan for the total amount of 12.9 bln tenge.

Net debt

Net debt as of 31 March 2024 amounted to 1,748 bln tenge (USD 3,912 mln), an increase in tenge by 6.2% and in US dollar terms by 8.1% in comparison to the volume as of 31 December 2023.

Cash and cash equivalents

Consolidated cash and cash equivalents including deposits

Name of the indicator	UoM	31 March 2024	31 Dec 2023	%
Cash and cash equivalents	bln tenge	837	1,051	-20.3%
Long-term deposits	bln tenge	63	64	-0.8%
Short-term deposits	bln tenge	1,323	997	32.7%
Cash and cash equivalents including deposits	bln tenge	2,223	2,112	5.3%

Numbers may not add up due to a rounding.

Consolidated cash, cash equivalents, including deposits as of 31 March 2024 increased by 5.3% compared to the indicator as of 31 December 2023 and amounted to 2,223 bln tenge. In US dollar terms, the indicator amounted to USD 4,977 mln and increased by 7.1% compared to the indicator as of 31 December 2023.

Key corporate events from the beginning of 2024:

On 18 January 2024, in Rome, Italy, KMG and Eni S.p.A. signed the Joint Confirmation Agreement on initiation of the Zhanaozen hybrid power plant construction project. The project provides for construction of wind power plant (77 MW) and solar power plant (50 MW) in collaboration with Eni’s subsidiary Plenitude, as well as 120 MW gas power plant in Zhanaozen.
On 21 February 2024, KMG and Tatneft signed a purchase and sale agreement for 50% shares of Karaton Operating Ltd, a shareholder’s agreement and a financing agreement for the Karaton Subsalt project.
On 11 March 2024, KMG and SOCAR signed the Agreement on phased increase in the volumes of Kazakh oil transit across the territory of the Azerbaijan Republic and the Memorandum of Strategic Cooperation in Sale and Purchase of the Kazakh Oil.
On 29 March 2024, legal procedures related to Sinopec’s entry into the project for the construction of a polyethylene plant with a capacity of 1.25 million tonnes in the Atyrau region was completed, thus the share of participants in the project: KMG - 40% (consolidated), SIBUR - 30%, Sinopec - 30%.
In May 2024, the Board of Directors of KMG recommended that from the net income received by the end of 2023, an amount of 300 bln tenge be allocated for the payment of dividends to KMG shareholders. The amount of dividend per common share for 2023 will be 491.71 tenge. The decision to pay dividends is a subject to approval by shareholders at the Annual General Meeting of Shareholders (AGM), which will be held on 28 May 2024.

For further information, please visit https://www.kmg.kz/en/investors/reporting

Contacts: ir@kmg.kz, Tel: +7(7172) 78 64 34

About JSC National Company KazMunayGas:

KMG’s main assets are as follows:

Upstream: Ozenmunaigas (OMG) – 100%, Embamunaigas (EMG) – 100%, KazakhTurkmunai (KTM) –100%, KazMunayTeniz – 100%, Urikhtau (UO) – 100%, Dunga – 60%, Ural Oil and Gas (UOG) – 50%, Mangistaumunaigaz (MMG) – 50%, Kazgermunai (KGM) – 50%, Karazhanbasmunai (KBM) – 50%, KazakhOil Aktobe (KOA) – 50%, PetroKazakhstan Inc (PKI) – 33%, Tengizchevroil (Tengiz) – 20%, Karachaganak – 10%, Kashagan – 16.88%.
Midstream: KazTransOil – 90%, Kazakhstan China Pipeline (KCP) – 50%, Munai Tas – 51%, Batumi Oil Terminal – 100%, Caspian Pipeline Consortium (CPC) – 20.75%, Kazmortransflot – 100%.
Downstream: Pavlodar refinery – 100%, Atyrau refinery – 99,53%, Shymkent refinery – 49,72%, Caspi Bitum – 50%, KMG International – 100%, Petromidia – 54,63%, Vega – 54,63%, KazRosGas – 50%, Kazakhstan Petrochemical Industries Inc – 49.5%.

^[1] The amounts were converted to US dollars for user convenience at average exchange rates for respective periods (average USD/KZT for the first quarter of 2024 and 2023 were at 450.18 and 454.82 respectively; period-end USD/KZT as of 31 March 2024 and 31 December 2023 were at 446.78 and 454.56 respectively.

^[3] Source: S&P Global Platts.

^[7] Total debt at the end of the reporting period = bonds plus loans (short-term and long-term). Guarantees issued are not included in the calculation.

^[8] Gross debt and Net debt are shown as of 31 December 2023.

^[10] Production results are stated in accordance with KMG's shareholdings in joint ventures and associates and 100% for consolidated subsidiaries. More detailed information is available in the press release on production results for the first quarter of 2024 at the link: https://www.kmg.kz/en/investors/reporting

^[11] Details are disclosed in the Company's financial statements for the relevant period.

JSC NC KazMunayGas First Quarter of 2024 Trading Update

Sun, 19 May 2024 00:00:00 +0500

JSC NC KazMunayGas First Quarter of 2024 Trading Update

Astana, 17 May 2024 - Joint-stock (JSC) National Company (NC) KazMunayGas
(“KMG” or “Company”), Kazakhstan's national oil and gas company, announces its operating results for the first quarter of 2024.

Key operating highlights for the first quarter of 2024 compared to the first quarter of 2023:

· Oil and gas condensate production increased by 1.7% and amounted to 6,064 thous. tonnes;

· Oil transportation volumes increased by 14.2% and amounted to 21,541 thous. tonnes;

· Hydrocarbons refining volumes at the Kazakh and Romanian refineries amounted to 4,626 thous. tonnes compared to 4,936 thous. tonnes.

	1Q 2024 (net to KMG)	1Q 2023 (net to KMG)	%
Oil production, thous. tonnes	6,064	5,961	+1.7%
Gas production, mln m³	2,522	2,410	+4.6%
Oil transportation, thous. tonnes	21,541	18,858	+14.2%
Oil refining, thous. tonnes	4,626	4,936	-6.3%

Upstream

Oil and gas condensate production volume for the first quarter of 2024 amounted to 6,064 thous. tonnes (503 kbopd) representing an increase of 1.7%. Production volume of associated and natural gas raised by 4.6% to 2,522 mln m³.

Oil and condensate production, thous. tonnes	1Q 2024 (net to KMG)	1Q 2023 (net to KMG)	%
OMG	1,233	1,255	-1.8%
MMG	768	769	-0.2%
EMG	682	658	+3.7%
Tegniz	1,500	1,469	+2.1%
Kashagan	780	794	-1.7%
Karachaganak	291	281	+3.5%
Others	812	735	+10.4%
Total	6,064	5,961	+1.7%

Oil production at Tengiz increased by 2.1% and amounted to 1,500 thous. tonnes (132 kbopd). Associated gas production increased by 3.4%, amounting to 839 mln m³. The increase in production was due to the high productivity of wells, reliable operation of second-generation plants and a complex of technological lines, as well as favorable ambient temperatures affecting the productivity of plants.

KMG's share of oil production at Kashagan amounted to 780 thous. tonnes (68 kbopd), showing a decrease of 1.7%. The decrease was due to limited capacity for reinjection and processing of associated gas. Gas production amounted to 501 mln m³, which is comparable to the volumes for the first quarter of 2023.

Oil and condensate production at Karachaganak increased by 3.5% and amounted to 291 thous. tonnes (25 kbopd). Gas production increased by 13.0% and amounted to 638 mln m³. The increase in production was due to the restoration of the ability of the Orenburg Gas Processing Plant to receive sour gas.

The volume of oil and condensate production from operating assets increased by 2.2% to 3,494 thous. tonnes (279 kbopd). The growth was mainly due to the acquisition of a 60% stake in the Dunga field in November last year. Gas production increased by 2.4% to 543 mln m³, mainly due to the Rozhkovskoye gas and condensate field (Ural Oil and Gas LLP, KMG share - 50%) was put into commercial operation at the end of 2023 in the West Kazakhstan region.

Midstream

The total volume of oil trunk pipelines and sea transportation increased by 14.2% to 21,541 thous. tonnes.

Oil transportation1, thous. tonnes	1Q 2024 (100%)	1Q 2024 (net to KMG)	1Q 2023 (net to KMG)	%
KazTransOil	11,379	11,379	10,348	+10.0%
Kazakhstan-China Pipeline	4,768	2,384	2,322	+2.7%
MunaiTas²	1,473	751	707	+6.2%
Caspian Pipeline Consortium	17,195	3,568	3,387	+5.3%
Kazmortransflot	3,460	3,460	2,094	+65.2%
Total	-	21,541	18,858	+14.2%
1 Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation. 2 MunaiTas is an equity-consolidated joint venture and transportation volumes are quoted at a 51% ownership interest.

The volume of oil transportation through main pipelines increased by 7.9% and amounted to 18,081 thous. tonnes. The increase was due to an increase in the transportation of oil export volumes to Europe, as well as an increase in the volume of oil transit and oil shipments from the port of Aktau.

The total volume of offshore oil transportation in the reporting year increased by 65.2% to 3,460 thous. tonnes due to increased volumes in the Mediterranean and Caspian Seas. The increase in transportation volumes in the Mediterranean Sea occurred mainly due to Azerbaijani oil transported via the Baku-Tbilisi-Ceyhan oil pipeline; the increase in volumes in the Caspian Sea was associated with an increase in transportation volumes along the routes Aktau port - Makhachkala port and Aktau port - Baku port.

Trading

Sales volumes of KMG's own produced oil and gas condensate increased by 3.2% and amounted to 6,124 thous. tonnes, of which 64.6% was exported.

Supplies of own produced oil and gas condensate volumes to cover the needs of the domestic market amounted to 2,165 thous. tonnes, including deliveries of crude oil from operating assets (Ozenmunaigas, Embamunaigas, Kazakhturkmunai and Urikhtau Operating) in the amount of 1,455 thous. tonnes to Atyrau, Pavlodar and Shymkent refineries for further oil refining and sales of oil products.

Downstream

Hydrocarbon refining, thous. tonnes¹	1Q 2024 (net to KMG)	1Q 2023 (net to KMG)	%
Atyrau refinery	1,426	1,410	+1.2%
Pavlodar refinery	1,477	1,466	+0.8%
Shymkent refinery	676	644	+5.0%
Caspi Bitum	43	63	-31.7%
Petromidia	943	1,279	-26.2%
Vega	61	76	-19.9%
Total	4,626	4,936	-6.3%
¹Shymkent refinery and Caspi Bitum refining volumes are indicated at a share of 50%, other refineries – 100%.

The total volume of hydrocarbon processing compared to the same period in 2023 decreased by 6.3% and amounted to 4,626 thous. tonnes.

The volume of hydrocarbon processing at Kazakhstan refineries increased by 1.1% and amounted to 3,622 thous. tonnes, mainly due to the volume of processing at Shymkent refinery. At the same time, there was a decrease in processing volumes at Caspi Bitum due to a decrease in requests for bitumen production.

Refining volume at KMG International plants (Petromidia, Vega) in Romania decreased by 25.9% and amounted to 1,004 thous. tonnes. The reduction in refining volume occurred due to the late launch of the soft hydrocracking unit, as well as the shutdown of the plant for overhaul in the first half of March of the reporting year.

The volume of production of oil products at Kazakh and Romanian refineries decreased by 5.6% and amounted to 4,327 thous. tonnes.

Kazakhstani refineries produced 3,305 thous. tonnes of petroleum products, which is 1.2% more than in the first quarter of 2023.

KMG International plants (Petromidia, Vega) produced 22.4% less oil products, amounting to 1,022 thous. tonnes compared to 1,318 thous. tonnes a year earlier, due to a corresponding decrease in refining volumes at the plants.

For further information, please visit http://www.kmg.kz

Contacts:

Email: ir@kmg.kz

Tel: +7 7172 78 64 34

About JSC National Company KazMunayGas:

KMG’s main assets are as follows:

Midstream: KazTransOil – 90%, Kazakhstan China Pipeline (KCP) – 50%, Munai Tas – 51%, Batumi Oil Terminal – 100%, Caspian Pipeline Consortium (CPC) – 20.75%, Kazmortransflot – 100%.

Acting CEO of KazMunayGas appointed

Wed, 15 May 2024 00:00:00 +0500

Samruk-Kazyna CEO Nurlan Zhakupov introduced to the staff of KazMunayGas Askhat Khasenov, who is newly appointed, until the date of Extraordinary General Meeting of KazMunayGas Shareholders, to hold his duties as a CEO of KazMunayGas.

The head of the Fund, in his turn, thanked Magzum Mirzagaliyev for his work as a head of KMG.

A. Khasenov graduated from the Kazakh National Technical University named after Kanysh Satpayev with a degree in Oil and Gas Wells Drilling, and the University of International Business with a degree in Management.

Started his career in 2005 as a 3^rd grade Oil And Gas Production Operator in Turgai Petroleum.

- In 2006-2010 he worked in Main Dispatching Department of Oil and Gas Industry, where he was employed from Leading Specialist of Technical Regulation Department to the managerial position of Vice-President.

- In different years of his employment background he held key governmental posts.

- From January 2022 to May 2024 he held the post of a Vice-Minister of Energy of the Republic of Kazakhstan.

- Awarded the KURMET order.

NC KazMunayGas JSC published Annual Report for 2023

Tue, 30 Apr 2024 00:00:00 +0500

The Annual Report describes key performance of NC KazMunayGas JSC Group, its significant corporate events, consolidated business operating and financial results as well as results of Company’s sustainable development for 2023.

The Annual Report, the Company’s primary documents that discloses information to its stakeholders, has been prepared in compliance with regulatory requirements and the best practices of information disclosure.

The Annual Report is available at the following link: www.kmg.kz

KazMunayGas took part in an international innovative initiative to achieve the UN Sustainable Development Goals

Tue, 02 Apr 2024 00:00:00 +0500

KazMunayGas participated in the international SDG Ambition Business Accelerator innovative initiative. As of the end of the program, a 3-6-9 months action plan based on the 8-step approach was developed to achieve the Company's SDG.

On 28 March 2024, a ceremony was held in the Plaza, UN Almaty office, where the participants of SDG Ambition - UN Global Compact business accelerator, an innovative initiative on sustainable business practices promotion - were awarded.

The SDG Ambition Business Accelerator is a six-month educational initiative created by the UN experts and partners to accelerate the integration of the 17 Sustainable Development Goals into strategic and operational aspects of business. More than 90 countries and 1,600 companies have participated in the Program since its launch. From October 2023 to March 2024, a special training for Central Asian countries was organized to be attended by representatives of 40 companies from Kazakhstan, Uzbekistan and Kyrgyzstan.

KMG joined the UN Global Compact in 2006, which it is proactively involved in and is committed to the 10 UN Global Compact principles and 17 SDGs. The Company's Annual Sustainability Report is our communication of progress under the UN Global Compact.

The UN Global Compact is the world's largest corporate sustainability initiative. The UN Global Compact encourages companies to align their strategies and operations with the Ten Universal Principles on human rights, labor, environment and anti-corruption, and to contribute to the Sustainable Development Goals. Today, the Global Compact unites more than 21,000 business organizations from around the world.

Invitation to FY 2023 Financial and Operational Results Update Call

Mon, 18 Mar 2024 00:00:00 +0500

JSC NC KazMunayGas (“the Company”) invites you to participate in a conference call on operating and financial results for 2023, which will be held on 26 March 2024 at 05:00 pm Astana time / 12:00 am GMT / 08:00 am EDT.

The results for the reporting period will be presented by the Company's management.

Please complete the registration form using the link to participate in the call:

https://us06web.zoom.us/webinar/register/WN_-rvlvLhBRwisFUI1lxlalQ

Dial-in details will be sent to you by e-mail after the registration.

A registered participant can connect only from one device. If you need to change your device during the call, you should log out and log in from new device.

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2023 consolidated financial statements and press release are available on the Company's website:

https://www.kmg.kz/en/investors/reporting/

The presentation will be available on the day of the call on the Company's website

For questions, please contact the Investor Relations Team at tel. +7 (7172) 78 64 34, e-mail ir@kmg.kz

About the Company:

National Company KazMunayGas is Kazakhstan's national operator for exploration, production, refining and transportation of hydrocarbons, representing the State in Kazakhstan's petroleum sector.

JSC NC KazMunayGas announces 2023 FY financial results

Thu, 14 Mar 2024 00:00:00 +0500

Key financial indicators for 2023^[1] compared to 2022:

Revenue amounted to 8,320 bln tenge (USD 18,236 mln) compared to 8,693 bln tenge (USD 18,860 mln);
EBITDA amounted to 1,995 bln tenge (USD 4,372 mln) compared to 2,536 bln tenge (5,502 mln);
The Company's net profit including share in income of joint ventures and associates amounted to 924 bln tenge (USD 2,026 mln) compared to 1,307 bln tenge (USD 2,835 mln);
Net profit adjusted for share in profit of joint ventures and associates^[2] amounted to 1,010 bln tenge (USD 2,214 mln) compared to 778 bln tenge (USD 1,687 mln);
Free cash flow amounted to 984 bln tenge (USD 2,157 mln) compared to 1,116 bln tenge (USD 2,421 mln);
Gross debt as of 31 December 2023 amounted to 3,757 bln tenge (USD 8,265 mln) compared to 4,154 bln tenge (USD 8,980 mln) as of 31 December 2022;
The Company's net debt as of 31 December 2023 was at 1,645 bln tenge (USD 3,620 mln) compared to 2,154 bln tenge (USD 4,655 mln) as of 31 December 2022.

Name of the indicator	UoM	2023	2022	%
Dated Brent^[3], average	$/bbl	82.64	101.32	-18.4%
Dated Urals³, average	$/bbl	64.69	76.87	-15.8%
KEBCO³, average	$/bbl	81.74	77.20^[4]	-
Exchange rate, average	KZT/USD	456.21	460.93	-1.0%
Revenue	bln tenge	8,320	8,693	-4.3%
Share in profit of JVs and associates, net	bln tenge	534	991	-46.1%
Dividends received from JVs and associates, net	bln tenge	620	462	34.1%
Net profit	bln tenge	924	1,307	-29.2%
Net profit adjusted for the share in profit of JVs and associates	bln tenge	1,010	778	29.9%
EBITDA^[5]	bln tenge	1,995	2,536	-21.4%
Adjusted EBITDA^[6]	bln tenge	2,080	2,007	3.6%
CAPEX (accrual basis)	bln tenge	804	535	50.2%
CAPEX (cash basis)	bln tenge	683	451	51.4%
Free cash flow^[7]	bln tenge	984	1,116	-11.8%
Gross debt^[8]	bln tenge	3,757	4,154	-9.6%
Net debt^[9]	bln tenge	1,645	2,154	-23.6%

Operating results for 2023^[10] compared to 2022:

KMG's proven and probable hydrocarbon reserves (2P) increased by 3.7% and amounted to 733 mln tonnes of oil equivalent;
The volume of oil and gas condensate production increased by 6.9% and amounted to 23,532 thous. tonnes;
Oil transportation volumes increased by 7.6% and amounted 80,359 thous. tonnes;
The volume of refining of hydrocarbons at Kazakhstani and Romanian refineries amounted 19,593 thous. tonnes compared to 19,900 thous. tonnes.

	2023 (net to KMG)	2022 (net to KMG)	%
	2023 (net to KMG)	2022 (net to KMG)	%
Proved plus Probable (2P), mln. toe	733	707	+3.7%
Oil production, thous. tonnes	23,532	22,012	+6.9%
Gas production, mln m³	9,459	8,241	+14.8%
Oil transportation, thous. tonnes	80,359	74,658	+7.6%
Oil refining, thous. tonnes	19,593	19,900	-1.5%

Financial highlights for 2023

Revenue

Revenue amounted to 8,320 bln tenge (USD 18,236 mln), which is 4.3% lower compared to 2022.

Revenue dynamics were negatively impacted by an 18.4% decrease in the average Brent price for crude oil in 2023 compared to 2022.

Share in profit of joint ventures and associates

The share in income of joint ventures and associates decreased by 46.1% and amounted to 534 bln tenge (USD 1,171 mln) mainly due to a decrease in profits of “Tengizchevroil” LLP by 402 bln tenge (USD 864 mln) and CPC by 53 bln tenge (USD 114 mln).

EBITDA

EBITDA for 2023 amounted to 1,995 bln tenge (USD 4,372 mln) and decreased by 21.4% compared to 2,536 bln tenge (USD 5,502 mln) mainly due to a decrease in the segment of oil and gas exploration and production by 21.9%. The reduction was due to a decrease in the average Brent price for crude oil.

Adjusted EBITDA

Adjusted EBITDA reflecting dividends received from joint ventures and associates instead of share in income of joint ventures and associates amounted to 2,080 bln tenge (USD 4,560 mln), showing a growth of 3.6% mainly due to an increase in dividends from TCO.

Net profit

The Company's net profit decreased in comparison with 2022 by 29.2% and amounted to 924 bln tenge (USD 2,026 mln).

Net profit adjusted for share in profit of JVs and associates

Net profit adjusted for the share in profit joint ventures and associates increased by 29.9% from 778 bln tenge (USD 1,687 mln) to 1,010 bln tenge (USD 2,214 mln).

Cost of purchased oil, gas, oil products and other materials

The cost of purchased oil, gas, oil products and other materials in the reporting period decreased by 6.8% and amounted to 4,622 bln tenge (USD 10,131 mln). The decrease in cost was largely due to a decrease in the average price of purchased oil for resale.

Operating expenses

Operating expenses increased by 6.6% and amounted to 1,220 bln tenge (USD 2,674 mln) mainly due to the indexation of wage costs for employees in the regions of presence as well as an increase in transportation costs and costs for short-term leases.

Transportation and distribution costs amounted to 246 bln tenge (USD 538 mln), up 19.6% compared to 2022. An increase in costs was mainly due to an increase in the volume of oil sales by KMG Kashagan B.V. as well as due to an increase in the sales volume of petroleum products of KMG International.

General and administrative expenses increased by 10.8% and amounted to 178 bln tenge (USD 390 mln). The growth is associated with an increase in salary costs and an increase in reserves for accounts receivable, formed in accordance with IFRS requirements.

Taxes other than income tax decreased by 12.4% and amounted to 594 bln tenge (USD 1,302 mln) mainly due to decrease in rent tax on crude oil exports, mineral extraction tax due to decrease in crude oil prices, as well as due to decrease in export customs duty expenses.

Impairment of property, plant and equipment and intangible assets

As of 31 December 2023, due to negative results of drilling at the Zhenis project, as well as the receipt of a notification from the Ministry of Energy of the Republic of Kazakhstan about the termination of the subsoil use right in relation to the Aktoty and Kairan subsoil plots, a loss from impairment of exploration and exploration assets was estimated at a total amount of 114.5 bln tenge.

As of 31 December 2023, due to the impairment indicators presence, in particular, increased refining margins volatility in the oil and gas market, KMG International conducted an impairment test for property, plant and equipment and intangible assets and recorded a loss of 95 bln tenge.

In June 2023, an incident occurred at the Petromidia Refinery, a subsidiary of KMG International, which led to the temporary decommissioning of the Mild Hydrocracker installation. Petromidia Refinery conducted assessments to estimate the incident consequences and recognized impairment of property, plant and equipment for 2.7 bln tenge.

The total amount of loss from impairment of fixed assets, intangible assets and exploration expenses for the KMG group for 2023 amounted to 230.6 billion tenge.

Capital expenditures

The Company's capital expenditures accrual basis (disclosed in segment reporting) amounted to 804 bln tenge (USD 1,761 mln), an increase of 50.2% mainly due to well drilling expenditures in Ozenmunaigas JSC, Embamunaigas JSC and replacement of the section of the pipelines "Uzen-Atyrau-Samara", the reconstruction and expansion of the "Astrakhan-Mangyshlak" main waterline.

Dividends received from JVs and associates

Dividends received from joint ventures and associated companies compared to the same period increased by 34.1% and amounted to 620 bln tenge (USD 1,359 mln) mainly due to an increase in dividends from “Tengizchevroil” LLP by 219 bln tenge (USD 485 mln) and “PETROSUN” LLP by 29.4 bln tenge (USD 65 mln).

Free cash flow

Free cash flow decreased in comparison with 2022 by 11.8% and amounted to 984 bln tenge (USD 2,157 mln). The reduction was associated with a decrease in oil prices as well as with an increase in capital expenditures.

Debt management

Debt indicators

Name of the indicator	UoM	31 Dec 2023	31 Dec 2022	%
Bonds	bln tenge	3,046	3,282	-7.2%
Loans	bln tenge	711	873	-18.5%
Gross debt	bln tenge	3,757	4,154	-9.6%

Numbers may not add up due to a rounding.

Total debt as of 31 December 2023 amounted to 3,757 bln tenge (USD 8,265 mln), a decrease in tenge by 9.6% and by 8% in US dollar terms compared to 31 December 2022.

In April 2023, KMG carried out a full early repayment of Eurobonds due in 2025 in the amount of USD 500 mln. In December 2023, Atyrau Refinery LLP carried out full repayment of the loan from VTB Bank for 42,371 million rubles (equivalent to 213,729 mln tenge) including accrued interest and carried out partial repayment of the loan from Halyk Bank for a total amount of 102,674 mln tenge including interest.

The decrease in total debt was partially offset by KMG International's attraction of a syndicated loan in the amount of USD 307 mln (equivalent to 140 bln tenge), a loan from the Bank of Tokyo Mitsubishi UFJ. Ltd in the amount of USD 101 mln (equivalent to 46 bln tenge) and a loan from Banque de Commerce et de Placements in the amount of USD 83 mln (equivalent to 38 bln tenge) for the working capital financing.

Net debt

Net debt as of 31 December 2023 amounted to 1,645 bln tenge (USD 3,620 mln), a decrease in tenge by 23.6% and in US dollar terms by 22.3% in comparison to the volume as of 31 December 2022.

Cash and cash equivalents

Consolidated cash and cash equivalents including deposits

Name of the indicator	UoM	31 Dec 2023	31 Dec 2022	%
Name of the indicator	UoM	31 Dec 2023	31 Dec 2022	%
Cash and cash equivalents	bln tenge	1,051	763	37.7%
Short-term deposits	bln tenge	997	1,178	-15.4%
Long-term deposits	bln tenge	64	59	7.9%
Cash and cash equivalents including deposits	bln tenge	2,112	2,001	5.6%

Numbers may not add up due to a rounding.

Consolidated cash, cash equivalents, including deposits as of 31 December 2023 increased by 5.6% compared to the indicator as of 31 December 2022 and amounted to 2,112 bln tenge. In US dollar terms, the indicator amounted to USD 4,646 mln and increased by 7.4% compared to the indicator as of 31 December 2022.

Key corporate events from the beginning of 2023:

On 9 February 2023, KMG and PJSC LUKOIL signed an Agreement of Participants, a Purchase and Sale Agreement for a 50% share in the authorized capital of Kalamkas-Khazar Operating LLP (KCO) and an Agreement on the terms of financing of the operator’s activities by the Participants.
On 9 March 2023, Standard&Poor's rating agency confirmed the Company's rating at BB+, revising the outlook to stable, which reflects the agency's rating action in relation to Kazakhstan (the rating was confirmed at BBB-, the forecast was revised to stable).
On 20 March 2023, the supply of Tengiz oil began in the direction of Baku, in April 2023 from Ceyhan. At the end of 2023, 1,057 thousand tons were shipped from the port of Aktau.
On 26 April 2023, KMG made a full early repayment of Eurobonds due in 2025 in the amount of USD 500 mln.
On 27 April 2023, KMG issued bonds in the amount of 50 bln tenge with a term of 10 years and an interest rate of 0.5% in order to finance the project “Reconstruction and expansion of the main water pipeline “Astrakhan-Mangyshlak” 1^st stage”.
On 3 May 2023, the Standard&Poor's rating agency raised the probability of government support from "high" to "very high", the Company's rating remained unchanged.
On 20 June, 2023, KMG and Rosneft Deutschland signed an agreement on the supply of crude oil in the amount of 100 thousand tons per month until the end of 2023 from the resources of the Karachaganak field to the PCK Raffinerie oil refinery in the city of Schwedt.
On 21 June 2023, KMG issued a guarantee in favor of the Eurasian Development Bank as security for the fulfillment of obligations of Kazakhstan Petrochemical Industries Inc. LLP (the amount of the credit line is USD 150 mln, the loan term is 3 years).
On 21 June 2023, at the Petromidia refinery in Constanta (Romania), a fire broke out at a light hydrocracking unit after special maintenance work was carried out. The firemen managed to localize the fire and take the situation under full control even before the arrival of special vehicles of the Inspectorate for Emergency Situations. Now actions are being taken according to the corrective action plan. The installation was launched on 26 February 2024.
On 22 June 2023, Fitch Ratings upgraded KMG's credit rating from BBB- to BBB with a stable outlook, against the background of an increase in the rating of creditability. KMG's rating was equated to Kazakhstan's sovereign rating.
On 26 June 2023, KMG completed the payment of dividends to shareholders for 2022. The total amount of dividends was 300 bln tenge. The dividends per common share amounted to 491.71 tenge.
On October 17, 2023, KMG, SIBUR and China Petroleum & Chemical Corporation (Sinopec) signed Sale and Purchase Agreements for the participation interest in the polyethylene production project.
In October 2023, Kazakhstan Petrochemical Industries Inc (KPI) LLP started production of a new grade of polypropylene in the gas chemical complex. Polypropylene grade PP H031 BF/7 is used in Europe and Kazakhstan in the production of polymer film packaging for food products and goods for everyday life.
In November 2023, KMG received updated 2022 ESG Risk Rating Score, which amounted to 32.3 points, while previously the rating was 28.5 points.
In November 2023, KMG completed the acquisition from TotalEnergies EP Danmark A/S (a subsidiary of TotalEnergies S.E.) 100% of the shares in the authorized capital of Total E&P Dunga GmbH, which holds the subsoil use right in the Dunga project. KMG's share in the Dunga subsoil use project is 60%.
On 22 November 2023, KMG issued bonds in the amount of 20 bln tenge with a term of 10 years and an interest rate of 0.5% in order to finance the project “Reconstruction and expansion of the main water pipeline “Astrakhan-Mangyshlak” 1st stage”.
At the end of 2023, Samruk-Kazyna sold KMG shares worth 1.3 trillion tenge (122,023,898 ordinary shares) in favor of the Ministry of Finance of the Republic of Kazakhstan. The share of the Ministry of Finance of the Republic of Kazakhstan is 20%.
On 13 December 2023, Moody's rating agency confirmed KMG's credit rating at "Baa2", revising the outlook to "positive", on the back of an upgrade of the standalone credit rating. KMG's rating was equated to Kazakhstan’s sovereign rating.
On 26 December 2023, Standard & Poor's Ratings agency confirmed KMG's credit rating at "BB+", revising its standalone credit rating from "bb-" to "bb".
In December 2023, Atyrau Refinery LLP made full repayment of the loan from VTB Bank for 42,371 million Rubles (equivalent to 213,729 mln tenge), including accrued interest.
On 18 January 2024, KMG and Eni S.p.A. (Eni) signed the Joint Confirmation Agreement on initiation of the Zhanaozen hybrid power plant construction project.
On 21 February 2024, a purchase and sale agreement for 50% shares of Karaton Operating Ltd. was signed between KMG and PJSC Tatneft.
Since the beginning of 2023, new appointments have been made in the structure of the Board of Directors and the Management Board of KMG. As of March 2024, the Board of Directors of KMG consists of 9 people (Berdigulov Ye.K. — Chairman of the Board of Directors, Otynshiyev E.M., Karabalin U.S., Mirzagaliyev M.M., Zhubayev A.S., Argingazin A.A., Holland P.M., Mynsharipova S.N., Shakirov A.O.), the Management Board of KMG consists of 9 people (Mirzagaliyev M.M. — Chairman of the Management Board, Abdulgafarov D.Ye., Zakirov B.K., Lavrenov V.S., Makeyev D.S., Aryssova D.A., Brekeshev S.A., Kudaibergenov K.M., Soyunov N.D.).

For further information, please visit https://www.kmg.kz/en/investors/reporting/

Contacts: ir@kmg.kz, Tel: +7 (7172) 78 64 34

About JSC National Company KazMunayGas:

KMG’s main assets are as follows:

Upstream: Ozenmunaigas (OMG) — 100%, Embamunaigas (EMG) — 100%, KazakhTurkmunai (KTM) –100%, KazMunayTeniz — 100%, Urikhtau (UO) — 100%, Dunga — 60%, Ural Oil and Gas (UOG) — 50%, Mangistaumunaigaz (MMG) — 50%, Kazgermunai (KGM) — 50%, Karazhanbasmunai (KBM) — 50%, KazakhOil Aktobe (KOA) — 50%, PetroKazakhstan Inc (PKI) — 33%, Tengizchevroil (Tengiz) — 20%, Karachaganak — 10%, Kashagan — 16.88%.
Midstream: KazTransOil — 90%, Kazakhstan China Pipeline (KCP) — 50%, Munai Tas — 51%, Batumi Oil Terminal — 100%, Caspian Pipeline Consortium (CPC) — 20.75%, Kazmortransflot — 100%.
Downstream: Pavlodar refinery — 100%, Atyrau refinery — 99,53%, Shymkent refinery — 49,72%, Caspi Bitum — 50%, KMG International — 100%, Petromidia — 54,63%, Vega — 54,63%, KazRosGas — 50%, Kazakhstan Petrochemical Industries Inc — 49.5%.

^[1] The amounts were converted to US dollars for user convenience at average exchange rates for respective periods (average USD/KZT for 2023 and 2022 were at 456.21 and 460.93 respectively; period-end USD/KZT as of 31 December 2023 and 31 December 2022 were at 454.56 and 462.65 respectively.

^[3] Source: S&P Global Platts.

^[4] The start of quotations for KEBCO oil from 06/06/2022. The average price for 2022 is indicated for the period from 06/06/2022 till 31/12/2022.

^[8] Total debt at the end of the reporting period = bonds plus loans (short-term and long-term). Guarantees issued are not included in the calculation.

^[10] Production results are stated in accordance with KMG's shareholdings in joint ventures and associates and 100% for consolidated subsidiaries. More detailed information is available in the press release on production results for 2023 at the link: 12М 23 Operating press-release ENG clean.pdf (kmg.kz)

KMG and SOCAR sign Agreement on Phased Increase in the Transit Volumes

Tue, 12 Mar 2024 00:00:00 +0500

On 11 March in Baku, Azerbaijan, NC KazMunayGas JSC (KMG) and the State Oil Company of Azerbaijan Republic (SOCAR) signed the Agreement on Phased Increase in the Volumes of Kazakh Oil Transit across the Territory of the Azerbaijan Republic and the Memorandum of Strategic Cooperation in Sale and Purchase of the Kazakh Oil.

The bilateral documents were signed by Magzum Mirzagaliyev, Chair of KMG's Management Board and Rovshan Najaf, President of SOCAR, in the presence of Presidents of the Republic of Kazakhstan and the Azerbaijan Republic.

The Agreement on Phased Increase in the Transit Volumes of the Kazakh Oil across the Territory of the Azerbaijan Republic provides for an increase in the volumes of the Kazakh oil shipments along the Aktau-Baku-Tbilisi-Ceyhan route to 2.2 mn tonnes annually.

Under this Agreement, the parties will continue discussing the matters of decreasing the tariffs of transportation along the Aktau-Baku-Tbilisi-Ceyhan route, as well as transporting the Kazakh oil along the Baku-Supsa route.

You will recall that in 2022, KMG and SOCAR entered into the Agreement on Oil Transit along the Aktau-Baku-Tbilisi-Ceyhan route with the annual volume of 1.5 mn tonnes.

The Memorandum of Strategic Cooperation in Sale and Purchase of the Kazakh Oil establishes general conditions and principles of sale and purchase of the Kazakh oil for further processing at SOCAR group's refineries, as well as subsequent trading on the regional and global markets.

“The documents that we have signed today make an additional contribution to the strengthening of the strategic partnership between our companies in terms of the Kazakh oil transportation to the global markets,” M. Mirzagaliyev noted.

Reference information:

State Oil Company of Azerbaijan Republic (SOCAR) is a global energy company, headquartered in Azerbaijan and specializing in the production, processing and distribution of energy. Being the largest integrated energy business in the South Caucasus region, the company has extensive presence worldwide.

National Company “KazMunayGas” JSC (KMG) is Kazakhstan's leading vertically-integrated oil and gas company. KMG is managing assets throughout the entire production cycle, ranging from exploration and production of hydrocarbons to transportation, refining and provision of specialized services. The company, founded in 2002, represents Kazakhstan in the country's petroleum sector.

КМГ and SOCAR discuss further cooperation in oil transportation

Sat, 09 Mar 2024 00:00:00 +0500

On 9 March, during his trip to Baku, Magzum Mirzagaliyev, Chair of the Management Board of NC KazMunayGas JSC (KMG), held a meeting with Rovshan Najaf, President of the State Oil Company of Azerbaijan Republic (SOCAR).

The parties discussed phased increase in the volumes of the Kazakh oil transit along the Baku-Tbilisi-Ceyhan oil pipeline and the matters of the Kazakh oil transportation along the Baku-Supsa oil pipeline.

“KazMunayGas views SOCAR and the most important strategic partner. We are confident that phased increase in the volumes of the Kazakh oil transit will provide new momentum for the development of mutually beneficial cooperation,” M. Mirzagaliyev highlighted.

It worth noting that, under the signed Agreement on Transit of 1.5 mn tonnes of Kazakh oil across the territory of Azerbaijan between KazMunayGas and SOCAR, Kazakh oil has been consistently transported along the Aktau-Baku-Ceyhan route.

Following the 2023 results, the port of Aktau shipped 1,057 thousand tonnes of oil, and 232 thousand tonnes during January-February 2024.

Reference information:

Head of KMG Gets a Look at BP Sangachal and Azertrans Terminals Operations

Sat, 09 Mar 2024 00:00:00 +0500

On 9 March, during his trip to Baku, Magzum Mirzagaliyev, Chair of the Management Board of NC KazMunayGas JSC (KMG), familiarized himself with the operations of BP Sangachal and Azertrans terminals, involved in the transit of the Kazakh oil.

During his call on Azertrans terminal, M. Mirzagaliyev visited Astana tanker owned by NMSC Kazmortransflot LLP, which delivered a batch of Tengiz oil to Baku for the supply to the Baku-Ceyhan oil pipeline, and met the tanker crew, young Kazakhstani people. The crew members emphasized that special attention in the organization of the technological processes is paid to the matters of vocational and environmental safety, facilitating uninterrupted oil shipments. The head of KMG inquired about the labour conditions of the seamen and wished them good luck and good passage.

The Astana tanker is operating along the Aktau-Baku route, shipping the Tengiz oil under the signed Agreement on Transit of 1.5 mn tonnes of Kazakh oil across the territory of Azerbaijan between KazMunayGas and SOCAR.

JSC NC KazMunayGas 2023 Trading Update

Tue, 27 Feb 2024 00:00:00 +0500

Joint-stock (JSC) National Company (NC) KazMunayGas (“KMG” or “Company”), Kazakhstan's national oil and gas company, announces its operating full year results for 2023.

Magzum Mirzagaliyev, Chairman of the Management Board of KMG:

“The company successfully continues its strategic course and achieves planned goals, the implementation of which is in the interests of all KMG stakeholders, including shareholders and investors, employees and partners, regions of operations and the country as a whole.

As part of the initiative to increase gas production at operating and exploration assets, we managed to launch three new fields in the reporting year. In May, we launched the Aksai Yuzhny field, in early December the Vostochny Urikhtau field, and completed 2023 with the commissioning of the Rozhkovskoye field.

At the end of November 2023, the deal to acquire a 60% stake from the French TotalEnergies in the Dunga oil and gas field, located in the Mangistau region, was completed. Oil production at the field for the reporting year amounted to 547 thous. tonnes, of which KMG’s share since entering the project is 40 thous. tonnes.

As part of the development of the trans-Caspian international transport route, we have started transporting oil towards Baku and further to the Baku-Tbilisi-Ceyhan oil pipeline, through which about 1 mln tonnes were shipped in 2023. Also, as part of the diversification of routes, we began transporting oil through the Atyrau-Samara oil pipeline and further through Transneft pipelines in the direction of Germany. At the end of 2023, we supplied about 1 mln tonnes of oil to Germany.

A significant event in January of the reporting year was the creation of a joint venture with partners from the United Arab Emirates, the Abu Dhabi Ports company, and the acquisition of two tankers Taraz and Liwa with a deadweight of 8 thous. tonnes. They are already involved in transporting Kazakh oil in the Caspian Sea.

Also, among the strategic goals, the Company systematically implements the planned tasks in the field of sustainable development, including its low-carbon development programme. For example, we are completing a feasibility study on the Mirny wind farm project with a capacity of 1 GW with Total Eren. Tender procedures for the selection of a contractor for the construction of facilities are planned for the hybrid power plant with Eni this year."

Highlights for 2023 compared to 2022:

KMG's proven and probable hydrocarbon reserves (2P) increased by 3.7% and amounted to 733 mln tonnes of oil equivalent;
Oil and gas condensate production increased by 6.9% and amounted to 23,532 thous. tonnes;
Oil transportation volumes increased by 7.6% and amounted to 80,359 thous. tonnes;
Hydrocarbons refining volumes at the Kazakh and Romanian refineries amounted to 19,593 thous. tonnes compared to 19,900 thous. tonnes.

	2023 (net to KMG)	2022 (net to KMG)	%
Proved plus Probable (2P), mln. toe	733	707	+3.7%
Oil production, thous. tonnes	23,532	22,012	+6.9%
Gas production, mln m³	9,459	8,241	+14.8%
Oil transportation, thous. tonnes	80,359	74,658	+7.6%
Oil refining, thous. tonnes	19,593	19,900	-1.5%

Operating results are represented in accordance with KMG's ownership interest in joint ventures and associates and 100% of results for consolidated subsidiaries, unless otherwise stated.

Hydrocarbon reserves

According to reserves report prepared in compliance with international PRMS standards by the international independent firm DeGolyer&MacNaughton, KMG’s proved plus probable hydrocarbon reserves (2P) amounted to 733 mln tonnes of oil equivalent (5,680 mln boe) as of 31 December 2023. Compared to 2022, the level of 2P reserves increased by 3.7%. The growth in indicators was due to the actual measures taken to increase the volume of geological and technical measures, drilling wells and changing development plans aimed at replenishing production at operating assets, as well as clarifying the development plans at Kashagan and Karachaganak fields.

Net reserves under PRMS as of 31 December 2023

Reserves, mln toe	2023 (net to KMG)	2022 (net to KMG)	%
Proved (1P)	507	486	+4.4%
Proved plus Probable (2P)	733	707	+3.7%
Proved plus Probable plus Possible (3P)	842	816	+3.3%

Reserves, mln boe	2023 (net to KMG)	2022 (net to KMG)	%
Proved (1P)	3,943	3,775	+6.7%
Proved plus Probable (2P)	5,680	5,478	+3.7%
Proved plus Probable plus Possible (3P)	6,502	6,294	+3.3%

Upstream

Oil and gas condensate production volume for 2023 amounted to 23,532 thous. tonnes (486 kbopd) representing an increase of 6.9%. Production volume of associated and natural gas raised by 14.8% to 9,460 mln m³.

Oil and condensate production, thous. tonnes	2023 (net to KMG)	2022 (net to KMG)	%
OMG	4,877	5,096	-4.3%
MMG	3,075	3,049	+0.9%
EMG	2,722	2,581	+5.5%
Tegniz	5,779	5,836	-1.0%
Kashagan¹	3,108	1,402	+121.8%
Karachaganak	1,086	1,013	+7.1%
Others	2,885	3,036	-5.0%
Total	23,532	22,012	+6.9%

¹ KMG’s share in the project increased to 16.88% after 15 September 2022

Oil production at Tengiz decreased by 1.0% and amounted to 5,779 thous. tonnes (126 kbopd). The decrease in production was due to the suspension of oil intake from the CPC oil intake system during scheduled maintenance of the oil pipeline and shutdowns of the marine terminal due to adverse weather conditions in the fourth quarter of 2023. Associated gas production decreased by 0.9%, and amounted to 3,202 mln m3.

Oil production at Kashagan for the share of KMG amounted to 3,108 thous. tonnes (68 kbopd), showing an increase of 121.8%, gas production amounted to 1,963 mln m3, an increase of 123.8%. The increase in production was mainly due to an increase in KMG's share in the project from 8.44% to 16.88% as a result of the completion of the transaction for the repurchase of a 50% stake in KMG Kashagan BV from Samruk-Kazyna in September 2022, as well as due to the shutdown of production in the summer of 2022 and capital and restoration work repairs of marine and land complexes.

Oil and condensate production at Karachaganak increased by 7.1% and amounted to 1,086 thous. tonnes (23 kbopd). Gas production increased by 15.1% and amounted to 2,239 mln m³. The increase in the possibility of receiving sour gas from the Orenburg Gas Processing Plant led to an increase in oil and condensate production.

The volume of oil and condensate production at operating assets decreased by 1.5% to 13,559 thous. tonnes (269 kbopd). Emergency power outages and capacity limitations by the Mangystau Nuclear Power Plant (MAEK) from July to September of the reporting year significantly affected the decline in production at the Ozenmunaigas fields and a number of other fields. Also, a decrease in production was observed in mature fields as a result of a natural drop in production. At the same time, the decline was partially offset by an increase in oil production at Embamunaigas, where successful geological and technical measures were carried out at mature fields and the Eastern Wing of the S. Nurzhanov field and the UAZ Severnoye were put into development.

In November 2023, the acquisition of KMG from TotalEnergies EP Danmark A/S (a subsidiary of TotalEnergies S.E.) of 100% of shares in the authorized capital of Total E&P Dunga GmbH, which owns the right of subsurface use in the Dunga project, was completed. Thus, KMG's share in the Dunga subsoil use project became 60%. The Dunga oil and gas field is located in the Tupkaragan district of the Mangystau region. The deposit was discovered in 1966. Geological reserves amount to 93 mln tonnes of oil and more than 7 bln cubic meters of gas.

Three gas projects were launched in the reporting year. On May 10, 2023, Kazgermunai began supplying gas from the Aksai Yuzhny field. The field is being developed by Kazgermunai, where JSC NC KazMunaiGas owns 50%.

On November 29 of the reporting year, Urikhtau Operating, with 100% KMG participation, commissioned the East Urikhtau field, which was the first in the Republic of Kazakhstan to use the Improved Model Contract.

On December 21, 2023, Ural Oil and Gas, 50% of which belongs to KMG, put into commercial operation the Rozhkovskoye gas condensate field in the West Kazakhstan region.

Midstream

The total volume of oil trunk pipelines and sea transportation increased by 7.6% to 80,359 thous. tonnes.

Oil transportation¹, thous. tonnes	2023 (100%)	2023 (net to KMG)	2022 (net to KMG)	%
Oil transportation¹, thous. tonnes	2023 (100%)	2023 (net to KMG)	2022 (net to KMG)	%
KazTransOil	44,188	44,188	40,656	+8.7%
Kazakhstan-China Pipeline	18,806	9,403	9,618	-2.2%
MunaiTas²	5,527	2,819	2,859	-1.4%
Caspian Pipeline Consortium	63,474	13,171	12,183	+8.1%
Kazmortransflot	10,778	10,778	9,343	+15.4%
Total	-	80,359	74,658	+7.6%
¹ Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation. ² MunaiTas is an equity-consolidated joint venture and transportation volumes are quoted at a 51% ownership interest.

The volume of oil transportation through trunk pipelines increased by 6.5% and amounted to 69,581 thous. tonnes. The growth is due to an increase in the transportation of oil for export through the KazTransOil system towards Germany, the shipment of oil through the port of Aktau in the direction of Baku-Tbilisi-Ceyhan, as well as an increase in the delivery of oil from the Kashagan field to the CPC system.

The total volume of offshore oil transportation in the reporting year increased by 15.4% to 10,778 thous. tonnes. The increase in transportation volumes was mainly due to an increase in the export of Kazakh oil along the route Aktau port - Baku port and further along the Baku-Tbilisi-Ceyhan oil pipeline.

Trading

Sales volumes of KMG's own produced oil and gas condensate increased by 7.1% and amounted to 23,695 thous. tonnes, of which 64.9% was exported.

Supplies of own produced oil and gas condensate volumes to cover the needs of the domestic market amounted to 8,311 thous. tonnes, including deliveries of crude oil from operating assets (Ozenmunaigas, Embamunaigas, Kazakhturkmunai and Urikhtau Operating) in the amount of 4,980 thous. tonnes to Atyrau, Pavlodar and Shymkent refineries for further oil refining and sales of oil products.

Downstream

Hydrocarbon refining, thous. tonnes¹	2023 (net to KMG)	2022 (net to KMG)	%
Atyrau refinery	5,475	5,224	+4.8%
Pavlodar refinery	5,434	5,480	-0.9%
Shymkent refinery	2,870	3,103	-7.5%
Caspi Bitum	427	461	-7.4%
Petromidia	5,012	5,258	-4.7%
Vega	374	373	+0.4%
Total	19,593	19,900	-1.5%
¹Shymkent refinery and Caspi Bitum refining volumes are indicated at a share of 50%, other refineries — 100%.

The total volume of hydrocarbon processing compared to the same period in 2022 decreased by 1.5% and amounted to 19,593 thous. tonnes:

The volume of hydrocarbon refining at Kazakh refineries decreased by 0.4% and amounted to 14,206 thous. tonnes. The reduction in processing occurred mainly at the Shymkent refinery due to a decrease in load in the middle of the reporting year on the back of unscheduled repairs of the heat exchanger at the catalytic reforming and catalyst regeneration plant. The increase in refining volumes at the Atyrau refinery partially offset the decrease in the volumes at the Shymkent refinery.
The refining volume at KMG International's plants (Petromidia, Vega) in Romania decreased by 4.3% and amounted to 5,387 thous. tonnes. The reduction in the volume of processing occurred after the incident at the soft hydrocracking plant in mid-summer 2023. Restoration work continues at the facility, the completion of which has been postponed to the end of the first quarter of 2024, due to the large volume of repair work on the restoration of reactors related to ensuring the integrity of equipment and further safe operation of the facility.

The volume of production of oil products at Kazakh and Romanian refineries decreased by 2.7% and amounted to 18,138 thous. tonnes:

Kazakhstani refineries produced 12,951 thous. tonnes of oil products, which is 1.3% less than the same period in 2022 due to a decrease in load at the Shymkent refinery;
KMG International refineries (Petromidia, Vega) produced 5.3% less of oil products with total production of 5,221 thous. tonnes compared to 5,512 thous. tonnes year-on-year.

For further information, please visit kmg.kz

Contacts: Email: ir@kmg.kz, Tel: +7 7172 78 64 34

About JSC National Company KazMunayGas:

KMG’s main assets are as follows:

Upstream: Ozenmunaigas (OMG) — 100%, Embamunaigas (EMG) — 100%, KazakhTurkmunai (KTM) — 100%, KazMunayTeniz — 100%, Urikhtau (UO) — 100%, Dunga — 60%, Ural Oil and Gas (UOG) — 50%, Mangistaumunaigaz (MMG) — 50%, Kazgermunai (KGM) — 50%, Karazhanbasmunai (KBM) — 50%, KazakhOil Aktobe (KOA) — 50%, PetroKazakhstan Inc (PKI) — 33%, Tengizchevroil (Tengiz) — 20%, Karachaganak — 10%, Kashagan — 16.88%.
Midstream: KazTransOil — 90%, Kazakhstan China Pipeline (KCP) — 50%, Munai Tas — 51%, Batumi Oil Terminal — 100%, Caspian Pipeline Consortium (CPC) — 20.75%, Kazmortransflot — 100%.
Downstream: Pavlodar refinery — 100%, Atyrau refinery — 99,53%, Shymkent refinery — 49,72%, Caspi Bitum — 50%, KMG International — 100%, Petromidia — 54,63%, Vega — 54,63%, KazRosGas — 50%, Kazakhstan Petrochemical Industries Inc — 49.5%.

KazMunayGas got acquainted with Chevron's innovative experience in low-carbon energy

Tue, 20 Feb 2024 00:00:00 +0500

A delegation of JSC NC KazMunayGas (KMG) and KMG Engineering LLP visited Chevron New Energies (a subsidiary of Chevron Corporation) to explore potential projects in the field of reducing carbon dioxide emissions in Kazakhstan.

Recall that in 2022, KMG and Chevron announced cooperation to explore potential opportunities in the field of reducing carbon emissions and signed a memorandum of understanding to assess potential opportunities for cooperation on projects in the field of reducing carbon emissions in Kazakhstan. As part of the cooperation, a focus group was already established at that time to review the KMG pilot project on carbon capture, use and storage (CCUS).

In accordance with the roadmap and the above-mentioned memorandum, the Kazakh delegation also got acquainted with the Chevron dispatch center during the trip, which helps prevent technological accidents, as well as provides departments with the necessary data during the drilling process. In addition, one of the topics of discussion during the negotiations was the Forest Climate project in the Pavlodar region.

Following the results of the trip, further steps were discussed to continue cooperation in the development of low-carbon technologies in Kazakhstan.

Background information:

Chevron New Energies was founded by Chevron Corporation in 2021 to work on projects in the field of carbon capture, utilization and storage (CCUS), low-carbon hydrogen, renewable fuels, offsets and other new areas.

The forest climate project in Pavlodar region is one of the newest initiatives for the possible creation of a green ring around one of the cities of the region. The essence of such projects is that the forest is planted, it grows, carbon units are calculated according to international standards and sold abroad for foreign currency. Thus, private capital investments in afforestation, soil regeneration and ecology of Kazakhstan are stimulated.

Kazakhstan will keep the cost of transit of Russian oil to China until 2034

Fri, 26 Jan 2024 00:00:00 +0500

KazTransOil JSC (a subsidiary of NC KazMunayGas JSC) will keep the cost of transit of Russian oil to China until 2034.

In accordance with the order of the Minister of Energy of the Republic of Kazakhstan, from January 1, 2024 through December 31, 2033, the cost of transporting 10 million tons of Russian oil per year through the territory of the Republic of Kazakhstan to the People's Republic of China along the route “Border of the Russian Federation – border of the Republic of Kazakhstan (Priirtyshsk) – Atasu (Republic of Kazakhstan) – Alashankou (People's Republic of China)” will amount to 15 US dollars per 1 ton, excluding VAT, including: on the section “border of the Russian Federation – border of the Republic of Kazakhstan (Priirtyshsk) – Atasu (Republic of Kazakhstan)”, including the transshipment of oil to the Atasu HOPS – 4.23 US dollars per 1 ton, excluding VAT; on the section “Atasu (Republic of Kazakhstan) – Alashankou (People's Republic of China)” – 10.77 US dollars per 1 ton excluding VAT.

The approved cost will remain at the level of the cost established in 2018 by the order of the Minister of Energy of the Republic of Kazakhstan for 2019-2023.

KazTransOil JSC extended until December 31, 2033 the contract with “Rosneft Oil Company” PJSC for provision of services on transportation of Russian oil through the territory of the Republic of Kazakhstan to the People's Republic of China.

KazTransOil JSC has been transiting Russian oil through the territory of the Republic of Kazakhstan to the People's Republic of China since 2014 within the framework of the agreement between the Government of the Republic of Kazakhstan and the Government of the Russian Federation on cooperation in the field of transportation of Russian oil through the territory of the Republic of Kazakhstan to the People's Republic of China dated December 24, 2013.

In 2014-2016, 7 million tons of Russian oil were transited annually through the territory of the Republic of Kazakhstan. Since 2017, the annual supply of Russian oil along the Priirtyshsk – Atasu – Alashankou route has been increased to 10 million tons.

In 2014-2023, KazTransOil JSC provided the supply of 91 million tons of Russian oil through the territory of the Republic of Kazakhstan to the People's Republic of China.

The Atasu – Alashankou main oil pipeline is part of the Kazakhstan-China main oil pipeline system and belongs to Kazakhstan-China Pipeline LLP, which is a joint venture of KazTransOil JSC (50%) and China National Oil and Gas Exploration and Development Company Ltd. (50 %). The design capacity of the Atasu – Alashankou main oil pipeline is 20 million tons of oil per year.

KazTransOil JSC is the national operator of the main oil pipeline. It is part of NC KazMunayGas JSC group, and owns a diversified network of main oil pipelines with a length of 5.4 thousand km.

KMG and Eni have signed an agreement for the implementation of a hybrid power plant project in Zhanaozen

Fri, 19 Jan 2024 00:00:00 +0500

On January 18, in Rome, Italy, NC KazMunayGas JSC (KMG) and Eni S.p.A. (Eni) signed the Joint Confirmation Agreement on initiation of the Zhanaozen hybrid power plant construction project.

The bilateral document was signed by Magzum Mirzagaliyev, Chair of the Management Board, KMG and Eni Chief Executive Officer Claudio Descalzi, in the presence of Kassym-Jomart Tokayev, President of Kazakhstan.

The project provides for construction of wind power plant (77 MW) and solar power plant (50 MW) in collaboration with Eni’s subsidiary Plenitude, as well as 120 MW gas power plant in Zhanaozen for supplying stable electricity to KMG's industrial facilities in the region. A hybrid project of this type will be the first to be implemented in Kazakhstan.

‘This project is in line with the goals of diversifying the business portfolio and decarbonizing the operations of KMG and Eni, ensuring the long-term sustainable development of our operations’, Magzum Mirzagaliyev, Chair of the Management Board of KazMunayGas, noted.

The plans are to bring the project to the full design capacity by the end of 2025. At the construction stage, the number of the engaged employees will be up to 800 people, at the operation stage, up to 80 people.

It's worth noting that NC KazMunayGas JSC implements the hybrid power plant construction project in line with the goals of the RoK's Carbon-neutral Transition Strategy until 2060.

KMG and CNOOC discuss matters of cooperation in upstream

Thu, 18 Jan 2024 00:00:00 +0500

On 16 January 2024, Magzum Mirzagaliyev, Chair of the Management Board of NC KazMunayGas JSC (KMG), held a meeting with Liu Yongjie, Chair of CNOOC International Limited, in Astana.

The parties discussed further steps for cooperation between the companies in the field of exploration, production and petrochemicals in Kazakhstan.

It is worth noting that, from the Chinese side, KMG was visited by a large delegation of CNOOC representatives led by the top decision-maker, Chairman of CNOOC International Limited Liu Yongjie, to discuss further implementation of projects within the framework of bilateral cooperation.

‘KMG fully supports further strengthening of mutually beneficial cooperation, and this is confirmed by the signed Memorandum of Understanding with CNOOC. We believe that this document will serve as a driver for further cooperation and joint discovery of new hydrocarbon deposits’, M. Mirzagaliyev, Chairman of KMG's Management Board, noted.

Earlier, on 16 October 2023, the Memorandum of Understanding was signed in Beijing between NC KazMunayGas JSC (KMG) and China National Offshore Oil Corporation (CNOOC), which memorandum provides for conducting joint geological research on the promising exploration projects, considering the possibility of cooperation within the production fields and in the services for the oil and gas sector.

Last year, KMG presented a number of promising offshore and onshore projects to CNOOC. These include geological exploration projects and a regional project for the Caspian sedimentary basin. CNOOC specialists have been given access to a virtual data room in order to assess the prospects of exploration areas and make an investment decision on geological exploration.

For reference use:

China National Offshore Oil Corporation (CNOOC) specializes in the offshore segment (exploration and production), and is one of the world's leading private oil and gas businesses. It has been listed on the Hong Kong Stock Exchange (HKSE) since 2001. The company's assets are spread over more than 20 countries on 4 continents.

In 2023, the volume of oil exports in the direction of the Baku-Tbilisi-Ceyhan oil pipeline was increased to 1 million 392 thousand tons

Fri, 12 Jan 2024 00:00:00 +0500

KazTransOil JSC (a subsidiary of NC KazMunayGas JSC) exported 3 million 376 thousand tons of Kazakh oil from the port of Aktau for 12 months of 2023, which is 1 million 108 thousand tons more compared to the same period in 2022.

The increase in the volume of transportation of Kazakh oil for export from the port of Aktau is due to an increase in the volume of raw materials shipped in the direction of the Baku-Tbilisi-Ceyhan oil pipeline, from 250 thousand tons to 1 million 392 thousand tons, which is 5.5 times more compared to the same period in 2022. 1 million 057 thousand tons of oil were shipped from the Tengiz field in this direction.

In addition, in the reporting period, 1 million 984 thousand tons of oil were shipped from the port of Aktau towards the port of Makhachkala.

In 2022, the President of the Republic of Kazakhstan Kassym-Jomart Tokayev ordered to increase the volume of oil transportation along the Trans-Caspian corridor. In accordance with this instruction, JSC NC KazMunayGas and the state oil company of the Republic of Azerbaijan SOCAR entered into an agreement providing for the transportation of up to 1.5 million tons of oil per year from the Tengiz field in the direction of the Baku-Tbilisi-Ceyhan oil pipeline.

993 thousand tons of Kazakh oil were delivered to Germany in 2023

Fri, 12 Jan 2024 00:00:00 +0500

KazTransOil JSC (a subsidiary of JSC NC KazMunayGas) has supplied 993 thousand tons of Kazakh oil to Germany in 2023.

In January-December 2023, the volume of transportation of Kazakh oil through the trunk oil pipeline system of Transneft PJSC towards the Adamova Zastava oil delivery point for further delivery to Germany amounted to 993 thousand tons.

In accordance with the oil transportation schedule approved by the Ministry of Energy of the Republic of Kazakhstan, KazTransOil JSC plans to transport 100 thousand tons of Kazakh oil in January 2024 for further delivery to Germany.

In 2024, KazTransOil JSC plans to ship up to 1.2 million tons of Kazakh oil via the trunk oil pipeline system of Transneft PJSC towards the Adam’s Zastava oil delivery point for delivery to Germany.

This transit is carried out within the framework of the relevant agreement between the Government of the Republic of Kazakhstan and the Government of the Russian Federation dated June 7, 2002.

For reference:

KazTransOil JSC is the national operator of the main oil pipeline. It is part of the NC KazMunayGas JSC group. KazTransOil JSC owns a diversified network of main oil pipelines 5.4 thousand km in length.

S&P affirms KazMunayGas at BB+

Thu, 28 Dec 2023 00:00:00 +0500

On December 26, 2023, the international rating agency «Standard & Poor’s Global Ratings» (S&P) affirmed the long-term JSC NC «KazMunayGas» (KMG) rating at «BB+», the outlook is «Stable», while the stand-alone credit rating was upgraded from «bb-» to «bb».

The full text of the «S&P» rating agency's press release can be found at the following link: https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/3105764

KMG ranks first in Top 50 ESG disclosure rating

Tue, 19 Dec 2023 00:00:00 +0500

JSC NC KazMunayGas took first place in the ranking of the 50 best companies for disclosing non-financial information in corporate reports.

The rating was carried out by PwC Kazakhstan among 96 organizations. As part of the study, an assessment was made of the quality and availability of ESG information in annual reports and sustainability reports of Kazakhstani companies for 2022.

The purpose of the rating is to assess how Kazakh companies disclose ESG information, identify best practices, and provide recommendations for further development.

The rating methodology includes 129 criteria. A score is given for each criterion (from 1 to 10). The evaluation criteria included such disclosure blocks as sustainable development strategy, corporate governance, society, ecology, and reporting practices. Moreover, additional points were awarded for clarity, timeliness, and quality of presentation of information.

“This year, we have significantly increased the requirements for assessing the level of disclosure of ESG Information of Kazakhstani companies, placing greater emphasis on approaches to management and strategy, and adding industry indicators. However, we see that the development of Kazakhstani non-financial reporting as a whole is catching up with these international trends that we have introduced, and a significant number of companies withstand even the increased assessment criteria. In our view, this suggests that sustainability leaders in Kazakhstan are keeping up with the evolving sustainability agenda and are working successfully to incorporate these innovations into their ESG Practices generally and into their disclosure practices.” - noted in the PwC Kazakhstan report.

The top 50 Kazakhstani companies, on average, have the best ratings for disclosing their sustainable development strategy. At the same time, the strategic section assessed disclosures on the process of identifying significant issues of sustainable development, the presence of goals, as well as interaction with stakeholders and integration of the UN Sustainable Development Goals. Also, one of the most difficult tasks is the disclosure of information on social impacts, i.e. understand these impacts: determine how the company affects people's lives, and evaluate the extent of this impact. Here KMG also received high marks from experts and a special nomination for the best disclosure of social issues.

The subsidiary company KazTransOil JSC was also included in the top 10 leaders of the rating.

You can view the rating at https://www.pwc.com/kz/en/assets/esg-2023-final-draft.pdf

Moody's affirmed the credit rating of KazMunayGas at Baa2, the outlook was revised from stable to positive

Thu, 14 Dec 2023 00:00:00 +0500

On December 13, 2023, the international rating agency Moody's Investors Service (Moody's) affirmed the long-term issuer rating, senior unsecured rating and rating of the medium-term bond program of JSC NC KazMunayGas (KMG) at the level of Baa2. The forecast has been revised from “stable” to “positive”.

The positive outlook on KMG's rating reflects Moody's view on the sustainability of the company's standalone creditworthiness indicators.

Thus, KMG’s credit rating is equivalent to the sovereign credit rating.

The volume of Kazakh oil exports from the port of Aktau for 11 months of 2023 increased by 50%

Mon, 11 Dec 2023 00:00:00 +0500

KazTransOil JSC (a subsidiary of NC KazMunayGas JSC) exported 3 million 62 thousand tons of Kazakh oil from the port of Aktau for 11 months of 2023, which is 1 million 14 thousand tons, or 50% more compared to the same period last year.

The increase in the volume of transportation of Kazakh oil for export from the port of Aktau is due to an increase in the volume of raw materials shipped towards the port of Baku, from 205 thousand tons to 1 million 238 thousand tons, which is 6 times more than in the same period in 2022. In addition, in the reporting period, 1 million 824 thousand tons of oil were shipped from the port of Aktau towards the port of Makhachkala.

In 2022, the President of the Republic of Kazakhstan Kassym-Jomart Tokayev ordered to increase the volume of oil transportation along the Trans-Caspian corridor. In accordance with this instruction, JSC NC KazMunayGas and the state oil company of the Republic of Azerbaijan SOCAR entered into an agreement providing for the transportation of 1.5 million tons of oil per year from the Tengiz field in the direction of the Baku-Tbilisi-Ceyhan oil pipeline.

KMG implements advanced compliance standards

Sat, 09 Dec 2023 00:00:00 +0500

9 December is an International Anti-Corruption Day. This year is also marked by the 20^th anniversary of the adoption of the UN Convention against Corruption.

In KazMunayGas, Compliance responsible for implementation of global corporate governance practices and relevant policies in the company is in charge of anti-corruption activities.

Compliance conducts due diligence of the company's counterparties to meet the standards of ethics and fair business conduct. This helps to avoid contracts with unreliable partners, mitigate the risks of non-delivery of goods, non-performance of work or failure to render services.

Candidates for managerial and administrative vacancies in KMG are also checked. One of the conditions for employment is now psychological and polygraph (lie detector) test for applicants, who would be engaged in procurement procedures.

Another important direction of Compliance activities is internal analysis of corruption risks. Its results show the reasons and conditions of corruption offenses as well as shortcomings in the company's business processes.

In order to create an effective conflict of interest management system, a universal declaration of conflicts of interest for all employees of KazMunayGas Group was introduced since 2020.

In the interests of the rights of employees, an online reporting system was launched, which can be used to inform of all illegal acts on the part of both employees and third parties. Each employee or third party, in case they doubt about the lawfulness of the other employees' actions, counterparties or other persons, who cooperate with KMG and its subsidiaries, can report this to the company's management, his/her immediate supervisor or Compliance. This can be done through the Hotline, which contacts are available on the corporate website of KazMunayGas and on the websites of its subsidiaries.

To raise awareness among employees of KazMunayGas and compliance services, compliance officers of KMG Group regularly hold meetings and seminars on anti-corruption laws, including with the participation of representatives of the Anti-Corruption Service.

M. Mirzagaliyev: Time to Develop a Petrochemical Industry Act

Fri, 08 Dec 2023 00:00:00 +0500

On 8 December, KazMunayGas CEO Magzum Mirzagaliyev took part in a meeting of the Board of KAZENERGY Association of the Oil, Gas and Energy Sector Organizations of Kazakhstan held in Almaty.

At the meeting of KAZENERGY Board, M. Mirzagaliyev was elected as a CEO of the Association.

He thanked the Board and members of the Association for their back-up and highlighted their successful joint support of brownfields under organization activities.

“I believe that this work should continue, whatever it is, because further fields production will save jobs, meet the demand of domestic refineries for oil and, accordingly, the country’s demand for petroleum products,” noted the head of KMG.

He also mentioned that, at the initiative of Head of State Kassym-Jomart Tokayev, an Improved Model-Based Contract (IMBC) was introduced in Kazakhstan, which contributes to a further development of activity in the domestic oil and gas industry. The first contract on the IMBC terms for hydrocarbon production at the complex projects was signed in February 2023 and covered the Kalamkas-Sea, Khazar and Auezov block, located in the Kazakh sector of the Caspian Sea. KazMunayGas is developing this offshore project together with its strategic partner.

M. Mirzagaliyev also focused on further development of the petrochemical industry in Kazakhstan.

“It’s time to develop and adopt a Petrochemical Industry Act regulating the provision of raw materials, implementation of petrochemical projects, and development of further processing. The Association’s support in this matter is important for KMG,” he added.

The head of KMG also spoke about the plans of Kazakhstan to achieve the carbon neutrality by 2060, which will require further development of Kazakh Emissions Trading Scheme and its integration with the world market, as well as additional efforts towards carbon pricing, RES development, hydrogen and geothermal energy, use of carbon capture, use and storage technology (CCUS).

“The world needs oil as the basis of stability for the energy transition, and KazMunayGas is going to provide this along with green energy development. We invest in the low-carbon projects. We are working over a number of initiatives on construction of plants with renewable power generation,” concluded M. Mirzagaliyev.

KazMunayGas received several international awards

Tue, 05 Dec 2023 00:00:00 +0500

The annual report of JSC NC KazMunayGas (KMG, the Company) for 2022 received several prestigious international awards:

· The company took first place in the category “Best printed report – International” from Corporate & Financial Awards (CFA, UK).

· The Moscow Exchange (MOEX) awarded KMG with “gold” in the category “Best presentation of strategy and investment attractiveness” in the annual report, and also included the report in the shortlist of the main nomination for companies with a capitalization of more than 200 billion rubles.

· ARC Awards (Annual Report Competition, USA) awarded the Annual Report with the “Honors” insignia in the category “Best pdf version of the annual report” among oil and gas companies.

JSC NC KazMunayGas (KMG, the Company) strives for high standards of doing business and stakeholders’ relations, including the investment community.Being one of the key communication tools of the Company the annual report allows KMG to talk about all the significant aspects of its activities in details, the challenges and achievements in the reporting year, Company’s strategical development directions and business potential.

“After the KMG’s IPO last year and attaining a status of a public company, the requirements for the Company to prepare the Annual Report, as well as to disclose information about its activities in general, are increasing. Stock exchanges, in their quest for transparency and compliance with new challenges, are implementing higher reporting standards every year. At the same time, the Company, , strives to implement the best international practices of public companies during the Annual Report preparation, which was highly appreciated by the expert community,” pointed Marat Dikanbayev, Director of the Financial Department of KMG.

KMG and AD Ports Group signed a Head of Terms on foundation of a ship repair and shipbuilding enterprise in Kazakhstan

Sat, 02 Dec 2023 00:00:00 +0500

The 2^nd of December, KazMunayGas (KMG) and AD Ports Group signed a Head of Terms in Dubai (UAE). The parties will study the potentials of a ship building and repair plant foundation in the Republic of Kazakhstan.

The bilateral document was signed by KMG CEO Magzum Mirzagaliyev and AD Ports Group CEO Mohammed Juma Al Shamisi in the presence of Kassym-Jomart Tokayev, President of Kazakhstan.

The document provides the main terms of cooperation. In particular, the parties will establish a joint working group to study the ship repair and shipbuilding plant construction feasibility at the shores of Caspian Sea in Kazakhstan.

"I believe that signing of the Head of Terms will be an important contribution to strengthening of the strategic partnership between our countries. To follow the instruction of the Head of State Kassym-Jomart Tokayev, we have started to study the feasibility of shipyard foundation on the territory of the Republic of Kazakhstan. We plan to adopt a rich experience and expertise of AD Ports Group in ship repair services as well" — KMG CEO Magzum Mirzagaliyev said.

Foundation of own ship repair and shipbuilding enterprise will give great opportunities to a comprehensive cycle of marine transport services, including construction of new ships and high-quality repair of the existing ones. It also contributes to the development of the region's economy, job creation and growth of technological potential in the maritime industry.

KazTransOil JSC will increase kazakh oil supplies to Germany by 54% in November

Thu, 30 Nov 2023 00:00:00 +0500

The volume of transportation of kazakh oil through the system of trunk oil pipelines of Transneft PJSC in the direction of the Adamova Zastava oil delivery point for further delivery to Germany will increase from the planned 100 thousand tons to 154 thousand tons. This was announced by the director of the transportation department of KazTransOil JSC Abai Beisembayev at the Issuer's Day organized by the Kazakhstan Stock Exchange.

«Despite the difficult meteorological conditions in the Black Sea, KazTransOil JSC fully fulfills its obligations to shippers. There are no restrictions on the part of Transneft PJSC for today. Due to the limitations of oil transportation through the system of the «Caspian Pipeline Consortium» JSC, a number of shippers who would like to pump oil through our system have applied to KazTransOil JSC. Operational work was carried out with Transneft PJSC on additional pumping of the resources of Karachaganak Petroleum Operating B.V. In November, it was planned to deliver 100 thousand tons of oil to Germany, but by the end of the month, the volume of transportation of kazakh oil through the system of trunk oil pipelines of Transneft PJSC in the direction of the Adamova Zastava oil delivery point for further delivery to Germany will amount to 154 thousand tons», — Abai Beisembayev said.

He also reported that KazTransOil JSC additionally took 55 thousand tons of oil for storage, of which 23 thousand tons of oil from Karachaganak Petroleum Operating B.V. and 32 thousand tons of oil from oil producing companies of the kashagan field.

«In December, the unscheduled volume of resources of Karachaganak Petroleum Operating B.V. will be pumped in the direction of the Adamova Zastava oil delivery point and oil from the kashagan field will be pumped in the direction of the Sheskharis transshipment complex (Novorossiysk)», — Abai Beisembayev added.

In December 2022, KazTransOil JSC sent an annual application for transportation in 2023 of 1.2 million tons of Kazakh oil through the trunk oil pipeline system of Transneft PJSC towards the Adamova Zastava oil delivery point for further delivery to Germany. This oil transit is carried out within the framework of the agreement between the Government of the Republic of Kazakhstan and the Government of the Russian Federation dated June 7, 2002.

KazTransOil JSC confirms its technical capability to supply 1.2 million tons of Kazakh oil per year towards the Adamova Zastava oil delivery point for further transportation to Germany, but the actual volumes of oil transportation depend on the requests of oil companies.

For information

Petrosun has supplied more than 362 thousand tons of liquefied petroleum gas

Wed, 29 Nov 2023 00:00:00 +0500

During 11 months of 2023, Petrosun has supplied to the domestic market 362,744 tons of liquefied petroleum gas (LPG), which is by 2.33% more than for the same period of 2022. The increase in supply was caused by a growth of LPG production at the three refineries of Kazakhstan.

It should be noted that the mentioned volume of 362,744 tons amounts to 27% of the total LPG volume allocated by the Plans, approved by the Commission for the formation of LPG Supply Plan outside commodity exchanges to the domestic market of the Republic of Kazakhstan, for 11 months of 2023 to gas supply organizations.

Due to a significant share of Petrosun refining at Shymkent refinery, the company makes main LPG deliveries to Turkestan region, Shymkent, Zhambyl region, Almaty, and Almaty region, covering over the past three months a 49 to 100% demand of these regions according to the LPG Supply Plan of the Ministry of Energy of the Republic of Kazakhstan, to the mentioned regions respectively.

One of the priority tasks in Petrosun’s activity is to support and implement state programs, and to maintain the stability of the oil products domestic market.

The entire volume of LPG produced for Petrosun in 2022 and for 11 months of 2023 was supplied to the domestic market. The total volume was approximately 748,036 tons.

As a reminder, the company sells LPG at the limit wholesale price approved annually by the Ministry of Energy of the Republic of Kazakhstan (per ton, including VAT):

· from July 2022 - KZT37,632,

· from July 2023 - KZT45,158.

The current deficit in the domestic market is, among other things, due to the disparity of LPG prices with the prices for gasoline and diesel fuel. In the first case, the number of cars converted to gas has significantly increased in the country. In the second case, farmers for drying cereals, oilseeds and other agricultural products began to actively switch to gas, which is more affordable than cheaper diesel fuel supplied under the state program for the period of autumn campaign on drying cereals and oilseeds.

Thus, the growth rates of LPG consumption significantly exceed the rate of its supply by producers. According to the RoK Ministry of Energy, from the beginning of 2023, LPG consumption in Kazakhstan has increased by more than 25%.

For reference:

Petrosun LLP, incorporated in January 2012, is a subsidiary of JSC NC "KazMunayGas" and CNPC International in Kazakhstan LLP.

New oil tankers arrived at the port of Aktau

Sun, 26 Nov 2023 16:15:00 +0500

The ceremonial arrival of TARAZ and LIWA tankers to the home port of Aktau took place on 26 November.

The oil tankers were acquired under cooperation between KazMunayGas (KMG) and AD Ports Group. The owner of the new tankers with the 8,000 tons’ deadweight is Caspian Integrated Maritime Solutions Ltd (CIMS) Joint Venture, whose shareholders are Kazmortransflot LLP (a subsidiary of KMG) and International Maritime Investments Ltd (a subsidiary of AD Ports Group).

Akim of Mangistau region Nurlan Nogayev, CEO of KMG Magzum Mirzagaliev, Ambassador of the United Arab Emirates (UAE) to Kazakhstan Mohamed Saeed Alariqi, CEO of AD Ports Group Mohamed Juma Al Shamisi, General Director of Kazmortransflot LLP Aidar Orzhanov, as well as other esteemed guests attended the ceremony.

KMG's CEO, in his ceremonial message, noted that the tankers were acquired under President Kassym-Jomart Tokayev's instruction to diversify the Kazakh hydrocarbon export routes.

«Together with acquiring the new tankers, we have made an important step in developing the Trans-Caspian route. In this regard, I would like to express my sincere gratitude to ADPorts Group – our strategic partner – for our successful joint project delivery. The new tankers pave the way to expanding our CIMS Joint Venture's oil fleet, which has ambitious goals to promote its services on the global logistics market», — KMG's CEO M. Mirzagaliyev said.

Akim of Mangystau region, Nurlan Nogayev, extended congratulations to Mohamed Juma Al Shamisi, CEO of AD Ports Group, and all guests from the UAE on the addition of new oil tankers to the international commercial seaport of Aktau. He also assured that the mayor's office of Mangystau region is ready to support all initiatives to strengthen bilateral Kazakh-Arab cooperation and foster the development of the transport and logistics industry in Kazakhstan.

Straight after all guests addressed their message, both countries' anthems were played, and the tankers' godmothers traditionally gave their blessing. Mrs Mubarka Al Mazrouei from the UAE was invited as a godmother of the Liwa tanker, while the godmother of the Taraz tanker was Ayagul Mirazova, the Hero of Labour and Honoured Teacher of the Republic of Kazakhstan.

It should be noted that one of the tankers has the name of an oasis in the UAE – Liwa, the second one is named after the ancient city of Kazakhstan – Taraz.

The vessels were built at the Damen shipyard owned by the Dutch concern. The tankers are 140 meters long and 16.7 meters wide, with a 4.2 meters draft and a 10-knot rate. They are equipped with advanced control systems with high technical characteristics and modern equipment, ensuring their reliability and high performance. The tankers comply with all international safety standards and environmental requirements.

The new tankers' operation is planned to start in December 2023. They will participate in the transportation of Kazakh oil through the Caspian Sea.

After the official ceremony, the guests boarded the tankers to make a familiarization tour.

To recap, shipping of the annual 1.5 million tons of Kazakh oil along the Aktau – Baku – Tbilisi – Ceyhan route started in March 2023. Kazakhstan and Azerbaijan, on a parity basis, are transporting oil on the Aktau – Baku sea route. New tankers will help to fully perform the obligations of the Kazakh Party in terms of the annual transportation of 750 thousand tons of oil.

For info:

AD Ports Group is the UAE port, industrial and logistics operator. The company is one of the largest holding companies in the region and has a broad portfolio of large companies covering key sectors of Abu Dhabi’s diversified economy. AD Ports Group operates several clusters, including ports, industrial cities, free zones, shipping, logistics, and digital technology.

National Company KazMunayGas JSC is the leading vertically integrated oil and gas company in Kazakhstan. KMG manages assets throughout the entire production cycle, from exploration and production of hydrocarbons to transportation, refining and specialized services. The company, founded in 2002, represents the interests of the country’s oil and gas industry.

JSC NC KazMunayGas Financial results for the nine months of 2023

Wed, 22 Nov 2023 00:00:00 +0500

Joint-stock National Company KazMunayGas (“KMG” or Company), Kazakhstan's national oil and gas company, published its interim condensed consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) 34 "Interim Financial Statements" for the three and nine months ended 30 September 2023, with a report on the results of the review of interim financial information by an independent auditor.

Key financial indicators for nine months of 2023^[1] compared to nine months of 2022:

Revenue amounted to 6,087 bln tenge (USD 13,439 mln) compared to 6,776 bln tenge (USD 14,774 mln);
EBITDA amounted to 1,680 bln tenge (USD 3,708 mln) compared to 2,020 bln tenge (4,404 mln);
The Company's net profit including share in income of joint ventures and associates amounted to 949 bln tenge (USD 2,095 mln) compared to 1,161 bln tenge (USD 2,532 mln);
Net profit adjusted for share in profit of joint ventures and associates^[2], amounted to 600 bln tenge (USD 1,324 mln) compared to 633 bln tenge (USD 1,381 mln);
Free cash flow amounted to 459 bln tenge (USD 1,013 mln) compared to 996 bln tenge (USD 2,172 mln);
Gross debt as of 30 September 2023 amounted to 4,114 bln tenge (USD 8,671 mln) compared to 4,143 bln tenge (USD 8,956 mln) as of 31 December 2022;
The Company's net debt as of 30 September 2023 was at 2,084 bln tenge (USD 4,392 mln) compared to 2,143 bln tenge (USD 4,632 mln) as of 31 December 2022.

Name of the indicator	UoM	9М 2023	9М 2022	%
Dated Brent^[3], average	$/bbl	82.07	105.51	-22.2%
Dated Urals^[3], average	$/bbl	61.00	81.07	-24.8%
KEBCO^[3], average	$/bbl	81.13	79.53^[4]	-
Exchange rate, average	KZT/USD	452.97	458.60	-1.2%
Revenue	bln tenge	6,087	6,776	-10.2%
Share in profit of JVs and associates, net	bln tenge	565	779	-27.4%
Dividends received from JVs and associates, net	bln tenge	216	250	-13.8%
Net profit	bln tenge	949	1,161	-18.3%
Net profit adjusted for the share in profit of JVs and associates	bln tenge	600	633	- 5.3%
EBITDA^[5]	bln tenge	1,680	2,020	-16.8%
Adjusted EBITDA^[6]	bln tenge	1,330	1,492	-10.8%
CAPEX (accrual basis)	bln tenge	494	325	52.0%
CAPEX (cash basis)	bln tenge	498	293	70.0%
Free cash flow^[7]	bln tenge	459	996	- 53.9%
Gross debt^[8]	bln tenge	4,114	4,143^[9]	-0.7%
Net debt^[10]	bln tenge	2,084	2,143⁹	-2.8%

Operating results for nine months of 2023^[11] compared to nine months of 2022:

· The volume of oil and gas condensate production increased by 9.0% and amounted to 17,508 thous. tonnes;
· Oil transportation volumes increased by 7.8% and amounted 59,371 thous. tonnes;
· The volume of refining of hydrocarbons at Kazakhstani and Romanian refineries amounted 14,901 thous. tonnes compared to 14,896 thous. tonnes.

	9M 2023 (net to KMG)	9M 2022 (net to KMG)	%
Oil production, thous. tonnes	17,508	16,061	+9.0%
Gas production, mln m³	7,008	5,942	+17.9%
Oil transportation, thous. tonnes	59,371	55,085	+7.8%
Oil refining, thous. tonnes	14,901	14,896	+0.03%

Financial highlights for nine months of 2023

Revenue

Revenue amounted to 6,087 bln tenge (USD 13,439 mln), which is 10.2% lower compared to nine months of 2022.

Revenue dynamics were negatively impacted by a 22.2% decrease in the average Brent price for crude oil in the first nine months of 2023 compared to nine months of 2022.

Share in profit of joint ventures and associates

The share in income of joint ventures and associates decreased by 27.4% and amounted to 565 bln tenge (USD 1,248 mln), mainly due to a decrease in profits of “Tengizchevroil” LLP by 243 bln tenge (USD 520 mln), “Mangistau Investments B.V.” by 16.1 bln tenge (USD 34 mln) and CPC by 16 bln tenge (USD 33 mln).

EBITDA

EBITDA for nine months of 2023 amounted to 1,680 bln tenge (USD 3,708 mln), decreased by 16.8% compared to 2,020 bln tenge (USD 4,404 mln) mainly due to a decrease in the segment of oil and gas exploration and production by 20.1%. The reduction was due to a decrease in the average Brent price for crude oil.

Adjusted EBITDA

Adjusted EBITDA, reflecting dividends received from joint ventures and associates, instead of share in income of joint ventures and associates, amounted to 1,330 bln tenge (USD 2,937 mln), showing a decrease of 10.8%.

Net profit

The Company's net profit decreased in comparison with 9 months of 2022 by 18.3% and amounted to 949 bln tenge (USD 2,095 mln).

Net profit adjusted for share in profit of JVs and associates

Net profit adjusted for the share in profit joint ventures and associates decreased by 5.3% from 633 bln tenge (USD 1,381 mln) to 600 bln tenge (USD 1,324 mln).

Cost of purchased oil, gas, oil products and other materials

The cost of purchased oil, gas, oil products and other materials in the reporting period decreased by 14.4% and amounted to 3,382 bln tenge (USD 7,466 mln). The decrease in cost was largely due to a decrease in the average price of purchased oil for resale.

Operating expenses

Operating expenses increased by 4.7% and amounted to 865 bln tenge (USD 1,910 mln) largely due to the increase in salary costs for employees in the regions of presence, as well as an increase in transportation costs and costs for short-term leases.

Transportation and distribution costs amounted to 176 bln tenge (USD 390 mln), up 22% compared to nine months of 2022. An increase in costs was mainly due to an increase in the sales volume of KMG Kashagan B.V. as well as due to an increase in the sales volume of petroleum products of KMG International.

General and administrative expenses increased by 11.8% and amounted to 117 bln tenge (USD 257 mln) due to an increase in payroll costs.

Taxes other than income tax decreased by 14.9%, amounted to 433 bln tenge (USD 955 mln), mainly due to a decrease in the cost of export customs duty, rent tax on crude oil export and mineral extraction tax due to lower oil prices.

Impairment of property, plant and equipment and intangible assets

As of 30 September 2023, due to the impairment indicators presence, in particular, increased refining margins volatility in the oil and gas market, KMG International conducted an impairment test for property, plant and equipment and intangible assets and recorded a loss of 95 bln tenge.

In September 2023, a fire broke out at a light hydrocracking unit at the Petromidia refinery, a subsidiary of KMG International. An impairment loss of property, plant and equipment in the amount of 3.7 bln tenge was recorded based on the results of the assessment.

As of 30 September 2023, due to negative results of drilling at the Zhenis project, as well as the receipt of a notification from the Ministry of Energy of the Republic of Kazakhstan about the termination of the subsoil use right in relation to the Aktoty and Kairan subsoil plots, a loss from impairment of exploration and exploration assets was estimated at a total amount of 102.4 bln tenge.

The total amount of loss from impairment of fixed assets, intangible assets and exploration expenses for the KMG group for the nine months of 2023 amounted to 200.8 billion tenge.

Capital expenditures

The Company's capital expenditures accrual basis (disclosed in segment reporting) amounted to 494 bln tenge (USD 1,091 mln), an increase of 52% mainly due to well drilling expenditures in Ozenmunaigas JSC, Embamunaigas JSC, KMG Karachaganak LLP and replacement of the section of the pipelines "Uzen-Atyrau-Samara", the reconstruction and expansion of the "Astrakhan-Mangyshlak" main waterline.

Free cash flow

Free cash flow decreased in comparison with 9 months of 2022 by 53.9% and amounted to 459 bln tenge (USD 1,013 mln). The decrease was associated with a decrease in oil prices in the period as well as with an increase in capital expenditures.

Debt management

Debt indicators

Name of the indicator	UoM	30 Sep 2023	31 Dec 2022	%
Bonds	bln tenge	3,186	3,282	-2.9%
Loans	bln tenge	928	862	7.7%
Gross debt	bln tenge	4,114	4,143	-0.7%

Numbers may not add up due to a rounding.

Total debt as of 30 September 2023 amounted to 4,114 bln tenge (USD 8,671 mln), a decrease in tenge by 0.7% and by 3.2% in US dollar terms compared to 31 December 2022.

In April 2023, KMG carried out a full early repayment of Eurobonds due in 2025 in the amount of USD 500 mln.

The decrease in total debt was partially offset by the attraction of a syndicated loan in the amount of USD 290 mln (equivalent to 131 bln tenge) and a loan from Banque de Commerce et de Placements in the amount of USD 63 mln (equivalent to 29 bln tenge) by KMG International for the working capital financing.

Net debt

Net debt as of 30 September 2023 amounted to 2,084 bln tenge (USD 4,392 mln), a decrease in tenge by 2.8% and in US dollar terms by 5.2% in comparison to the volume as of 31 December 2022.

Cash and cash equivalents

Consolidated cash and cash equivalents including deposits

Name of the indicator	UoM	30 Sep 2023	31 Dec. 2022	%
Cash and cash equivalents	bln tenge	1,266	763	66.0%
Short-term deposits	bln tenge	702	1,178	-40.4%
Long-term deposits	bln tenge	62	59	3.8%
Cash and cash equivalents including deposits	bln tenge	2,030	2,000	1.5%

Numbers may not add up due to a rounding.

Consolidated cash, cash equivalents, including deposits as of 30 September 2023 increased by 1.5% compared to the indicator as of 31 December 2022 and amounted to 2,030 bln tenge. In US dollar terms, the indicator decreased by 1% compared to USD 4,279 mln as of 31 December 2022.

Key corporate events from the beginning of 2023:

On 9 March 2023, Standard&Poor's rating agency confirmed the Company's rating at BB+, revising the outlook to stable, which reflects the agency's rating action in relation to Kazakhstan (the rating was confirmed at BBB-, the forecast was revised to stable).
In 26 April 2023, KMG made a full early repayment of Eurobonds due in 2025 in the amount of USD 500 mln.
On 27 April 2023, KMG issued bonds in the amount of 50 bln tenge with a term of 10 years and an interest rate of 0.5% in order to finance the project “Reconstruction and expansion of the main water pipeline “Astrakhan-Mangyshlak” 1^st stage”.
On 3 May 2023, the Standard&Poor's rating agency raised the probability of government support from "high" to "very high", the Company's rating remained unchanged.
On 21 June 2023, KMG issued a guarantee in favor of the Eurasian Development Bank as security for the fulfillment of obligations of Kazakhstan Petrochemical Industries Inc. LLP (the amount of the credit line is USD 150 mln, the loan term is 3 years).
On 21 June 2023, at the Petromidia refinery in Constanta (Romania), a fire broke out at a light hydrocracking unit after special maintenance work was carried out. The firemen managed to localize the fire and take the situation under full control even before the arrival of special vehicles of the Inspectorate for Emergency Situations. Now actions are being taken according to the corrective action plan. The planned launch date of the unit is the end of 2023.
On 22 June 2023, Fitch Ratings upgraded KMG's credit rating from BBB- to BBB with a stable outlook, against the background of an increase in the rating of creditability. KMG's rating was equated to Kazakhstan's sovereign rating.
On 26 June 2023, KMG completed the payment of dividends to shareholders for 2022. The total amount of dividends was 300.0 bln tenge. The dividends per common share amounted to 491.71 tenge.
In October 2023, KMG and TOTALENERGIES EP DENMARK A/S company signed a purchase and sale agreement for a 100% share of Total E&P Dunga GmbH.
In October 2023, Kazakhstan Petrochemical Industries Inc (KPI) LLP started production of a new grade of polypropylene in the gas chemical complex. Polypropylene grade PP H031 BF/7 is used in Europe and Kazakhstan in the production of polymer film packaging for food products and goods for everyday life.
In November 2023, KMG received updated 2022 ESG Risk Rating Score, which amounted to 32.3 points, while previously the rating was 28.5 points.
Since the beginning of 2023, new appointments have been made in the structure of the Board of Directors and the Management Board of KMG. As of November 2023, the Board of Directors of KMG consists of 9 people (Berdigulov Ye.K. – Chairman of the Board of Directors, Otynshiyev E.M., Karabalin U.S., Mirzagaliyev M.M., Zhubayev A.S., Argingazin A.A., Holland P.M., Mynsharipova S.N., Shakirov A.O.), the Management Board of KMG consists of 9 people (Mirzagaliyev M.M. – Chairman of the Management Board, Abdulgafarov D.Ye., Zakirov B.K., Lavrenov V.S., Makeyev D.S., Aryssova D.A., Brekeshev S.A., Kudaibergenov K.M., Khasanov D.K.).
On 26 October 2023, Samruk-Kazyna JSC and the National Bank of Kazakhstan concluded purchase and sale agreement on the Company’s 122,024 thous. common shares. The transaction is expected to be finalized by the end of 2023.

For further information, please visit https://www.kmg.kz/ru/investors/reporting/

Contacts: ir@kmg.kz, Tel: +7 (7172) 78 64 34

About JSC National Company KazMunayGas:

KMG’s main assets are as follows:

Upstream: Ozenmunaigas (OMG) – 100%, Embamunaigas (EMG) – 100%, Kazakhturkmunai (KTM) – 100%, KazMunayTeniz – 100%, Urikhtau (UO) – 100%, Mangistaumunaigaz (MMG) – 50%, Kazgermunai (KGM) – 50%, Karazhanbasmunai (KBM) – 50%, KazakhOil Aktobe (KOA) – 50%, Petrokazakhstan Inc (PKI) – 33%, Tengizchevroil (TCO) – 20%, Kashagan – 16.88%, Karachaganak (KPO) – 10%.
Midstream: KazTransOil – 90%, Kazakhstan China Pipeline (KCP) – 50%, Munai Tas – 51%, Batumi Oil Terminal – 100%, CPC – 20.75%, Kazmortransflot – 100%.
Downstream: Pavlodar refinery – 100%, Atyrau refinery – 99.53%, Shymkent refinery – 49.72%, Caspi Bitum – 50%, KMG International – 100%, Petromidia refinery – 54.63%, Vega refinery – 54.63%, Petromidia refinery – 54.63%, Vega refinery – 54.63%, KazRosGas – 50%, Kazakhstan Petrochemical Industries Inc. – 49.5%, Silleno – 49.9%

^[1] The amounts were converted to US dollars for user convenience at average exchange rates for respective periods (average USD/KZT for the nine months of 2023 and 2022 were at 452,97 and 458,60 respectively; period-end USD/KZT as of 30 September 2023 and 31 December 2022 were at 474,47 and 462.65 respectively.

^[3] Source: S&P Global Platts.

^[4] The start of quotations for KEBCO oil from 06/06/2022. The average price for 9M 2022 is indicated for the period from 06/06/2022 till 30/09/2022.

^[8] Total debt at the end of the reporting period = bonds plus loans (short-term and long-term). Guarantees issued are not included in the calculation.

^[9] Gross debt and net debt are shown as of 31 December 2022.

Since the beginning of the year, Kazakh oil exports from the port of Aktau have increased by 54%

Thu, 16 Nov 2023 00:00:00 +0500

KazTransOil JSC (a subsidiary of JSC NC KazMunayGas) increased the export of Kazakh oil from the port of Aktau by 54% for 10 months of 2023

In January-October 2023, the volume of transportation of Kazakh oil from the port of Aktau for export amounted to 2 million 800 thousand tons, which is 981 thousand tons, or 54%, more compared to the same period last year.

In particular, the volume of oil transportation towards the port of Baku from the port of Aktau increased by 964 thousand tons and amounted to 1 million 123 thousand tons. 1 million 676 thousand tons of Kazakh oil were shipped towards the port of Makhachkala from the port of Aktau, which is 17 thousand tons more compared to the same period for 10 months of 2022.

In 2022, the President of the Republic of Kazakhstan Kassym-Jomart Tokayev ordered to increase the volume of oil transportation along the Trans-Caspian corridor. In accordance with this instruction, JSC NC KazMunayGas and the state oil company of the Republic of Azerbaijan SOCAR entered into an agreement providing for the transportation of 1.5 million tons of oil per year from the Tengiz field in the direction of the Baku-Tbilisi-Ceyhan oil pipeline.

690 thousand tons of Kazakh oil were sent to Germany in 10 months of 2023

Thu, 16 Nov 2023 00:00:00 +0500

KazTransOil JSC (a subsidiary of JSC NC KazMunayGas) has supplied 690 thousand tons of Kazakh oil to Germany in 10 months of 2023

In January-October 2023, the volume of transportation of Kazakh oil through the trunk oil pipeline system of Transneft PJSC towards the Adamova Zastava oil delivery point for further delivery to Germany amounted to 690 thousand tons.

In November, KazTransOil JSC plans to supply 100 thousand tons of Kazakh oil to Germany.

NC “KazMunayGas” JSC announces changes in the composition of the Board of Directors

Mon, 06 Nov 2023 00:00:00 +0500

Following the results of the Extraordinary General Meeting of Shareholders (EGM) of NC “KazMunayGas” JSC (KMG) held today, Askar Orazaliyevich Shakirov was elected a member of the KMG’s Board of Directors (BoD), Independent Director.

A. Shakirov graduated from the Institute of Asian and African Countries at Lomonosov Moscow State University in 1978.

A. Shakirov previously held the positions of the Deputy Chairman of the Parliamentary Assembly of the Organization for Security and Cooperation in Europe (OSCE). He also served as the Member of the Senate of the Parliament of the Republic of Kazakhstan, Deputy Chairman of the Senate of the Parliament of the Republic of Kazakhstan, Chairman of the Committee on International Relations, Defense and Security of the Senate of the Parliament of the Republic of Kazakhstan.

The current composition of the BoD of KMG was elected on 14 August 2023.

Thus, the new composition of the KMG BoD is as follows:

Yernat Kudaibergenovich Berdigulov, the Chairman of the KMG BoD, representative of interests of JSC “Samruk-Kazyna”;
Yelzhas Muratovich Otynshiyev, representative of interests of JSC “Samruk-Kazyna”;
Uzakbay Suleimenovich Karabalin, representative of interests of JSC “Samruk-Kazyna”;
Magzum Maratovich Mirzagaliyev, the Chairman of the Management Board of NC “KazMunayGas” JSC;
Armanbay Saparbayevich Zhubayev, Independent Director;
Arman Anuarbekovich Argingazin, Independent Director;
Phillip Malcolm Holland, Independent Director;
Saya Naymanbaikyzy Mynsharipova, Independent Director;
Askar Orazaliyevich Shakirov, Independent Director.

JSC NC KazMunayGas 9M of 2023 Trading Update

Fri, 27 Oct 2023 00:00:00 +0500

Joint-stock (JSC) National Company (NC) KazMunayGas (KMG or Company) — Kazakhstan's national oil and gas company — announces its operating results for the nine months of 2023.

Highlights for the nine months of 2023 compared to the nine months of 2022:

Oil and gas condensate production increased by 9.0% and amounted to 17,508 thous. tonnes;
Oil transportation volumes increased by 7.8% and amounted to 59,371 thous. tonnes;
Hydrocarbons refining volumes at the Kazakh and Romanian refineries are decreased by amounted to 14,901 thous. tonnes compared to 14,896 thous. tonnes.

	9M 2023 (net to KMG)	9M 2022 (net to KMG)	%
Oil production, thous. tonnes	17,508	16,061	+9.0%
Gas production, mln m³	7,008	5,942	+17.9%
Oil transportation, thous. tonnes	59,371	55,085	+7.8%
Oil refining, thous. tonnes	14,901	14,896	+0.03%

Operating results are represented in accordance with KMG's ownership interest in joint ventures and associates and 100% of results for consolidated subsidiaries, unless otherwise stated.

Upstream

Oil and gas condensate production volume for the nine months of 2023 amounted to 17,508 thous. tonnes (483 kbopd) representing an increase of 9.0%. Production volume of associated and natural gas raised by 17.9% to 7,008 mln m³.

Oil and condensate production, thous. tonnes	9M 2023 (net to KMG)	9M 2022 (net to KMG)	%
OMG	3,625	3,805	-4.7%
MMG	2,295	2,258	+1.7%
EMG	2,011	1,921	+4.7%
Tengiz	4,339	4,302	+0.9%
Kashagan¹	2,301	734	+213.4%
Karachaganak	805	768	+4.8%
Others	2,132	2,273	-6.2%
Total	17,508	16,061	+9.0%

¹ KMG’s share in the project increased to 16.88% after 15 September 2022

Oil production at Tengiz increased by 0.9% compared to the production volume for the same period last year and amounted to 4,339 thous. tonnes (127 kbopd). The growth was due to the reliable operation of the second-generation plant and the technological line complex. Associated gas production increased by 0.2%, amounting to 2,399 mln m³.

Oil and gas production at Kashagan net to KMG amounted to 2,301 thous. tonnes (67 kbopd) and 1 452 mln m³, respectively, showing an increase of 213.4% and 222.0%, respectively. The increase in oil production at Kashagan was associated with an increase in KMG's share in the project from 8.44% to 16.88% as a result of the completion of a deal to buy back a 50% stake in KMG Kashagan B.V. from Samruk-Kazyna JSC in September last year, as well as with the planned overhaul of the offshore and onshore complexes carried out in June 2022 and the launch of the upgraded 2 sour gas injection compressors, launched in August and September last year.

Oil and condensate production at Karachaganak increased by 4.8% and amounted to 805 thous. tonnes (23 kbopd). Gas production increased by 10.8% and amounted to 1,638 mln m³. The growth in production was due to an increase in the ability to receive sour gas from the Orenburg Gas Processing Plant.

The volume of oil and condensate production from operating assets decreased by 1.9% to 10,063 thous. tonnes (267 kbopd). The main drop in production volumes occurred at Ozenmunaigas due to emergency power outages and capacity limitations by the Mangistau Nuclear Power Plant (MAEK) from July to September of this year. Also, a decrease in production was observed in mature fields as a result of a natural decline in production. At the same time, oil production at Embanmunaigas increased due to successful geological and technical activities at mature fields and the commissioning of the Eastern wing of the S. Nurzhanova and Uaz Severnoye fields. Growth was also observed at Mangistaumunaigaz due to the rapid implementation of enhanced oil recovery methods. Gas production at operating assets decreased by 6.2% to 1,518 million m³ mainly due to a decrease in volumes at Kazakhturkmunai because of a decrease in the capacity of the line between wells and gas receiving nodes, and at Kazakhoil Aktobe due to the shutdown of the receiving party's compressors.

Midstream

The total volume of oil trunk pipelines and sea transportation increased by 7.8% to 59,371 thous. tonnes.

Oil transportation¹, thous. tonnes	9M 2023 (100%)	9M 2023 (net to KMG)	9M 2022 (net to KMG)	%
KazTransOil	32,416	32,416	30,003	+8.0%
Kazakhstan-China Pipeline	13,913	6,957	7,129	-2.4%
MunaiTas²	3,987	2,033	2,067	-1.6%
Caspian Pipeline Consortium	48,021	9,964	8,995	+10.8%
Kazmortransflot	8,000	8,000	6,892	+16.1%
Total	-	59,371	55,085	+7.8%
¹ Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation. ² MunaiTas is an equity-consolidated joint venture and transportation volumes are quoted at a 51% ownership interest.

The volume of oil transportation through trunk pipelines increased by 6.6% and amounted to 51,371 thous. tonnes. The main growth was due to an increase in the volume of transportation of Kashagan oil through the KazTransOil system in the direction of Samara and to the CPC system, as well as oil transportation in the direction of the port of Aktau.

The total volume of seaborne oil transportation increased by 16.1% to 8,000 thous. tonnes mainly due to an increase in transportation volumes in the Mediterranean Sea on the back of the activation of the Baku-Tbilisi-Ceyhan oil pipeline as an alternative route for the Kazakh oil export, as well as an increase in the volumes of transported oil through the Black Sea from the CPC sea terminal in the port of Novorossiysk (Russian Federation) towards the port of Midia (Romania).

As part of the development of the Trans-Caspian route, new oil tankers “Taraz” and “Liwa” with a deadweight of 8,000 tonnes were purchased, which will be used in transporting Kazakh oil across the Caspian Sea. The new tankers belong to the Caspian Integrated Maritime Solutions Ltd joint venture, whose shareholders are the National Maritime Shipping Company Kazmortransflot (100% subsidiary of KMG) and 100% International Maritime Investments Ltd (100% subsidiary of Abu Dhabi Ports Group) (UAE).

Trading

Sales volumes of KMG's own produced oil and gas condensate increased by 8.5% and amounted to 17,703 thous. tonnes, of which 64.5% was exported.

Supplies of own produced oil and gas condensate volumes to cover the needs of the domestic market amounted to 6,278 thous. tonnes, including deliveries of crude oil from operating assets (Ozenmunaigas, Embamunaigas, Kazakhturkmunai and Urikhtau Operating) in the amount of 3,731 thous. tonnes to Atyrau, Pavlodar and Shymkent refineries for further oil refining and sales of oil products.

Downstream

Hydrocarbon refining, thous. tonnes	9M 2023 (net to KMG)	9M 2022 (net to KMG)	%
Atyrau refinery	4,367	4,167	+4.8%
Pavlodar refinery	3,973	3,970	+0.1%
Shymkent refinery¹	2,082	2,315	-10.1%
Caspi Bitum¹	352	361	-2.6%
Petromidia	3,840	3,817	+0.6%
Vega	287	268	+7.2%
Total	14,901	14,896	+0.03%
¹ Shymkent refinery and Caspi Bitum refining volumes are indicated at a share of 50%

The total volume of hydrocarbon processing almost unchanged compared to the same period in 2022 and amounted to 14,901 thous. tonnes:

The volume of hydrocarbons processed at Kazakhstan refineries decreased by 0.4% and amounted to 10,774 thous. tonnes. A decrease in processing occurred at the PKOP plant due to the shutdown of the plant in July this year to repair the heat exchanger at the catalytic reforming unit. At the same time, there was an increase in refining volumes at the Atyrau Refinery due to more reliable operation of the catalytic cracking unit this year, which partially offset the decrease in refining volumes at PKOP.
Refining volume at KMG International plants (Petromidia, Vega) in Romania increased by 1.0% and amounted to 4,127 thous. tonnes. Restoration work continues at the Petromidia plant after the incident on 21 June, the completion of which is planned until the end of November this year .

The volume of production of oil products at Kazakh and Romanian refineries decreased by 0.9% and amounted to 13,673 thous. tonnes:

Kazakhstani refineries produced 9,672 thous. tonnes of oil products, which is 1.3% less than the same period in 2022 due to the shutdown of the PKOP plant for repairs;
Refineries of KMG International (Petromidia, Vega) produced 4,001 thous. tonnes of oil products, which is almost the same year-on-year.

For further information, please visit http://www.kmg.kz

Contacts:

Email: ir@kmg.kz, Tel: +7 7172 78 64 34

About JSC National Company KazMunayGas:

KMG’s main assets are as follows:

Upstream: Ozenmunaigas (OMG) — 100%, Embamunaigas (EMG) — 100%, KazakhTurkmunai (KTM) — 100%, KazMunayTeniz — 100%, Urikhtau (UO) — 100%, Mangistaumunaigaz (MMG) — 50%, Kazgermunai (KGM) — 50%, Karazhanbasmunai (KBM) — 50%, KazakhOil Aktobe (KOA) — 50%, PetroKazakhstan Inc (PKI) — 33%, Tengizchevroil (Tengiz) — 20%, Karachaganak — 10%, Kashagan — 16.88%.
Midstream: KazTransOil — 90%, Kazakhstan China Pipeline (KCP) — 50%, Munai Tas — 51%, Batumi Oil Terminal — 100%, Caspian Pipeline Consortium (CPC) — 20.75%, Kazmortransflot — 100%.
Downstream: Pavlodar refinery — 100%, Atyrau refinery — 99,53%, Shymkent refinery — 49,72%, Caspi Bitum — 50%, KMG International — 100%, Petromidia — 54,63%, Vega — 54,63%, KazRosGas — 50%, Kazakhstan Petrochemical Industries Inc — 49.5%.

The subsidiary company of KazTransOil JSC in Georgia increased transshipment of Kazakh gas by 23% in 9 months of 2023

Thu, 26 Oct 2023 00:00:00 +0500

The total volume of cargo transshipment for 9 months of 2023 by Batumi Oil Terminal LLC (100% share of participation belongs to KazTransOil JSC) and Batumi Sea Port LLC (exclusive rights to manage 100% shares) amounted to 2 million 570 thousand tons.

In particular, the volume of oil transshipment decreased by 189 thousand tons and amounted to 86 thousand tons. 961 thousand tons of petroleum products were transshipped. In the reporting period, the volume of transshipment of Kazakh gas increased to 166 thousand tons from 135 thousand tons in January-September 2022. The volume of dry cargo transshipment amounted to 1 million 357 thousand tons, which is 42 thousand tons more than the same period in 2022.

KazTransOil JSC directly owns and manages production assets in Georgia through Batumi Oil Terminal LLC (BNT). BNT provides services for transshipment, pumping, storage of oil, petroleum products and gas, as well as processed products using its own berths, technological pipelines and tanks. The competitive advantage of BNT is flexibility in storage and transshipment of various grades of oil and petroleum products (including liquefied petroleum gas).

Petrosun Has Supplied Social Fuel Oil to Kazakhstan Regions for 42%

Wed, 18 Oct 2023 00:00:00 +0500

Since September 2023, PETROSUN has carried out fuel oil supply to the regions of Kazakhstan in the total volume of 22,420 tons. The provision with fuel oil is 42%. At the same time, another 9,140 tons of social fuel oil have been nominated for shipment at the three Kazakh refineries.

PETROSUN delivers fuel oil under the “Schedule of assigning regions and Astana, Almaty and Shymkent cities to the main resource holders of oil and petroleum products on fuel oil supply to social and industrial facilities and institutions in the 2023-2024 autumn-winter period” (hereinafter the Schedule) approved by the Ministry of Energy of the Republic of Kazakhstan and in accordance with targeted distribution of local executive bodies.

Last month, PETROSUN as part of the September volume provided for in the Schedule supplied fuel oil for 94%. There were delivered 25% of the monthly volume of fuel oil in October. The obligations will be fulfilled in full as payment is received from regional operators.

Karaganda, Akmola, Zhambyl regions and Almaty city were among the first to receive social fuel oil. The volume of supplied fuel was 12,180 tons.

Currently, the supply of fuel oil to the regions continues. The amount of 10,240 tons was delivered out of the volume of 30,430 tons planned under the Schedule for October.

From November 2023 to February 2024, PETROSUN intends to supply fuel oil to the regions assigned by the Schedule, namely: Atyrau (2,000 tons), Karaganda (25,647 tons), Ulytau (4,761 tons), Pavlodar (7,418 tons), East Kazakhstan (4,619 tons), Abay (540 tons), North Kazakhstan (3,869 tons), Zhambyl (15,028 tons), Zhetysu (6,876 tons), Turkestan (1,700 tons), Kyzylorda (6,085 tons), Mangistau (2,700 tons) and Almaty (614 tons) regions and the cities of Astana (1,000 tons), Almaty (10,592 tons), Shymkent (10,000 tons) and Baikonur (4,800 tons). The total volume will amount to 108,249 tons.

It should be noted that PETROSUN, unlike other resource holders, accounts for a significant part of social obligations. This is almost 60% of the total fuel oil supply according to the Schedule, which corresponds to 161,892 tons.

PETROSUN continues to fulfill the social obligations imposed on it by the state within the Schedule in full within the agreed timeframe.

For reference: PETROSUN LLP was established in January 2012. The company is a subsidiary of JSC National Company "KazMunayGas" and CNPC International in Kazakhstan LLP. Its core areas of activity include: crude oil purchase and refining, and refined products sale in the domestic and foreign markets.

KazTransOil JSC delivered 589,6 thousand tons of Kazakh oil to Germany for 9 months of 2023

Mon, 16 Oct 2023 00:00:00 +0500

In January-September 2023, the volume of Kazakh oil supplied through the system of main oil pipelines of Transneft PJSC in the direction of the Adamova Zastava oil delivery point for further delivery to Germany amounted to 589,6 thousand tons.

In October, KazTransOil JSC plans to supply 100 thousand tons of Kazakh oil to Germany.

In December 2022, KazTransOil JSC applied to Transneft PJSC to transport 1.2 million tons of Kazakh oil in 2023 through the system of Transneft oil pipelines in the direction of the oil delivery point «Adamova Zastava» for further transit to Germany. The transit of oil is within the framework agreement between the Government of the Republic of Kazakhstan and the Government of the Russian Federation, dated June 7, 2002.

In February, KazTransOil JSC transported the first batch of Kazakh oil to Germany in the amount of 20 thousand tons.

KazTransOil JSC confirms that it is technically possible to transport 1.2 tons of Kazakh oil in the direction of the Adamova Zastava oil delivery point for further delivery to Germany, but the actual volumes of oil transportation depend on the requests of oil companies.

KazMunayGas Receives Updated 2022 ESG Risk Rating Score

Fri, 13 Oct 2023 16:30:00 +0500

Sustainalytics agency has conducted the annual end-to-end performance study of NC KazMunayGas JSC in the sphere of environment, social policy and corporate Governance (ESG) for 2022.

Management of ESG risks by KMG was assessed by the rating agency at 32.3 points, while previously the rating was 28.5 points.

In the comparative rating, KMG moved from the 18th position to the 40th position among 306 global oil-and-gas companies rated by Sustainalytics. Detailed information on Sustainalytics rating is available here.

Sustainalytics assessed the ESG risk management in the company as ‘sound’. At the same time, the exposure to ESG risks was assessed as ‘high’. According to analysts, the high ESG risk exposure rating is in line with the industry average, i.e. the risks inherent in the oil and gas sector.

As expected, 2022 was a difficult year for the oil and gas sector in Kazakhstan, and the resulting score reflects the ESG the company faced in terms of emissions and waste volumes, industrial safety performance and corporate governance matters.

This being the case, KMG received a positive expert assessment on managing the anti-corruption risks, increased the level of risk management on human capital matters, while maintaining a stable level of risk management on the matters of resource use, biodiversity and business ethics.

KMG recognizes the importance of strengthening measures and efforts on the ESG aspects. The key ESG challenges for KMG are reducing emissions and waste, continuing to implement the Low-Carbon Development Program, strengthening work on labor protection and worker safety, as well as maintaining the corporate governance system at the level of the best international practices.

On 6 October 2023, the annual ad-hoc meeting of KMG's Board of Directors on sustainable development matters was held. At the meeting, the current issues of ensuring the Company’s sustainable development, the action plan to improve the ESG risk rating, disclosure of information on TCFD's recommendations, as well as the status of implementation of low-carbon projects were discussed.

In order to raise the transparency of the ESG disclosures, KMG has been publishing on an annual basis since 2012 the sustainability reporting (https://www.kmg.kz/ru/sustainable-development/) according to the GRI Standards.

Sustainalytics is a leading independent ESG and corporate governance research, ratings and analytics firm that supports investors around the world with the development and implementation of responsible investment strategies.

This publication contains information developed by Sustainalytics (www.sustainalytics.com). Such information and data are proprietary of Sustainalytics and/or its third party suppliers (Third Party Data) and are provided for informational purposes only. They do not constitute an endorsement of any product or project, nor an investment advice and are not warranted to be complete, timely, accurate or suitable for a particular purpose. Their use is subject to conditions available at https://www.sustainalytics.com/legal-disclaimers.

KazTransOil JSC increased exports of Kazakh oil from the port of Aktau by 53% for 9 months of 2023

Thu, 12 Oct 2023 00:00:00 +0500

In January-September 2023, the volume of Kazakh oil export from the port of Aktau amounted to 2 million 484.8 thousand tons, which is 864 thousand tons or 53% more compared to the same period last year.

In particular, the volume of oil transportation in the direction of the port of Baku from the port of Aktau increased by 870 thousand tons and amounted to 990.2 thousand tons. Towards the direction of the port of Makhachkala from the port of Aktau 1 million 494.6 thousand tons of Kazakh oil was shipped, which is 5.9 thousand tons less compared to the indicator for 9 months of 2022.

In 2022, the President of the Republic of Kazakhstan, Kasym-Jomart Tokayev, instructed to increase the volume of oil transportation along the Trans-Caspian corridor. In accordance with this instruction, NC KazMunayGas JSC and the SOCAR state oil company of the Republic of Azerbaijan concluded an agreement providing for the transportation of 1.5 million tons of oil per year from the Tengiz field in the direction of the Baku-Tbilisi-Ceyhan oil pipeline.

KazTransOil JSC is the national operator of the Republic of Kazakhstan on the main oil pipeline. It is part of the group of NC KazMunaiGas JSC. The Company owns a diversified network of main oil pipelines with a length of 5.4 thousand km.

Deputy Chairman of the Board of KazMunayGas participated in the plenary session of the Forum of the Women's Energy Club KAZENERGY “EmpowerHER energy forum”

Thu, 05 Oct 2023 00:00:00 +0500

On 3 October 2023, Deputy Chairman of the Board of JSC NC KazMunayGas (KMG, Company) Diana Aryssova participated in the plenary session of the Forum of the Women's Energy Club KAZENERGY “EmpowerHER energy forum”.

Creation of equal opportunities in the energy sector was discussed during the plenary session.

Heads of the largest oil and gas companies in Kazakhstan, government authorities, the KAZENERGY association and representatives of the business community attended the panel session. Diana Aryssova made her presentation about “Unlocking the women business potential as part of the sustainable development of KazMunayGas.”

KazMunayGas provides more than 47 thousand work places today. One of the aspects of KMG’s human capital development is compliance with gender equality and non-discrimination at all levels. Therefore, the Company welcomes global sustainable development initiatives, including the provision of equal opportunities for men and women.

KazMunayGas has chosen sustainable development as one of its priority goals within development strategy. The Company will continue to implement the planned initiatives and will provide support to women who make a significant contribution to the development of the Company”, — noted Deputy Chairman of the Management Board Diana Aryssova in her speech.

NC KazMunayGas JSC and Linde GmbH Signed a Memorandum of Understanding

Fri, 29 Sep 2023 00:00:00 +0500

During the visit of the President of the Republic of Kazakhstan, Kassym-Jomart Tokayev, to the Federal Republic of Germany, NC KazMunayGas (KMG) JSC and Linde GmbH signed a Memorandum of Cooperation and Understanding.

Magzum Mirzagaliyev, Chairman of the Board, signed on behalf of the Kazakh side and Oliver Pfann, Senior Vice President for Middle East, Europe, and Africa of Linde, on behalf of Linde.

The Memorandum signifies the expansion of cooperation between NC KazMunayGas JSC and Linde GmbH in the oil and gas industry on mutually beneficial terms. The companies have pledged to apply innovative and highly efficient design solutions to improve petrochemical and gas chemical processes. Additionally, the partnership will focus on developing and implementing carbon capture methods specifically tailored for KazMunayGas projects.

"In his address to the people of Kazakhstan, the President emphasized the need to develop the oil and gas processing cluster. This is a big window of opportunities for us, and strengthening the cooperation with Linde will help us to further actively develop this area", Magzum Mirzagaliyev said.

Dr. Oliver Pfann expressed confidence in the success of the upcoming projects: "Joint efforts of KazMunayGas and Linde GmbH will ensure the implementation of advanced technologies into practical solutions for the oil and gas industry. We are confident that our experience and technologies will help KazMunayGas in the realization of its ambitious plans in this area".

The signing of the Memorandum confirms KMG and Linde's readiness to embark on productive collaboration. The partnership reflects the companies' shared vision of sustainable development and innovation in the petrochemical industry.

About Linde

Linde is a leading global industrial gases and engineering company with 2022 sales of $33 billion. They live the mission of making our world more productive every day by providing high-quality solutions, technologies and services which are making their customers more successful and helping to sustain, decarbonize and protect the planet.

The company serves a variety of end markets such as chemicals & energy, food & beverage, electronics, healthcare, manufacturing, metals and mining. Linde's industrial gases and technologies are used in countless applications including production of clean hydrogen and carbon capture systems critical to the energy transition, life-saving medical oxygen and high-purity & specialty gases for electronics. Linde also delivers state-of-the-art gas processing solutions to support customer expansion, efficiency improvements and emissions reductions.

KazMunayGas announces the search for a strategic partner for the joint implementation of the Bolashak Project

Wed, 13 Sep 2023 00:00:00 +0500

JSC NC “KazMunayGas” is searching for a strategic partner for joint implementation of the new subsoil use project, Bolashak.

1) Name of the new subsoil use project (subsoil site) — Bolashak, subsoil site Bolashak.

2) Location of subsoil sites — Mangistau Region (partly located in the Kazakhstan sector of the Caspian Sea). The subsoil site is included in the State Fund Management Programme with the indication of coordinates and is on the List of subsoil site territory for exploration and production or production of hydrocarbons for granting subsoil use rights to national companies. Please see the link to the document:

https://www.gov.kz/memleket/entities/miid/documents/details/446556?lang=ru

3) Requirements for legal entities (consortium of legal entities) establishing eligibility criteria for the strategic partner of JSC NC “KazMunayGas” for investment financing of the Bolashak Project for the subsequent acquisition of subsoil use rights (the “Requirements”):

These Requirements have been developed in accordance with Code No. 125-VI of the Republic of Kazakhstan dated 27 December 2017 “On Subsoil and Subsoil Use”.

“Organisation” means a Kazakhstani or foreign legal entity (or an association of two or more legal entities).

“Parent Company” means a legal entity that owns 100% of the participation interest (shareholdings) in the Organisation, whether directly or indirectly.

Existence of state registration as a legal entity (extract from the Commercial Register or other legalised document certifying that the applicant is a legal entity under the law of a foreign country), name and location of the Organisation.
Information on managers, legal entities, individuals, states and international organisations that directly or indirectly control the strategic partner.
Information on the past activities of the strategic partner, including a list of countries in which it has operated over the last three years.
The Organisation must not be in liquidation, reorganisation or bankruptcy proceedings.
The Organisation must not have any outstanding arrears in the payment of taxes and other mandatory payments to the budget.
Confirmation of the availability of sufficient financial resources to carry out the work programme, which shall include the scope, description, and schedule of work during the exploration period.
The Organisation must undertake to carry out investment financing of exploration under a joint activity contract (agreement) and/or a financing agreement concluded for the purpose of obtaining the subsoil use rights on the basis of direct negotiations in accordance with the procedure established by Article 103(7) of the Code of the Republic of Kazakhstan “On Subsoil and Subsoil Use”.
The Organisation must undertake to pay the subscription bonus or reimburse the amount of the subscription bonus paid by the national hydrocarbon company.
The Organisation must have positive experience of at least 5 years in exploration and production within the Republic of Kazakhstan and/or abroad.
Availability of qualified professionals (management) in the Organisation with at least ten (10) years of experience in the oil and gas industry.
Sufficient solvency of the Organisation to ensure implementation of the new subsoil use project confirmed by financial statements and other documents. The Organisation’s equity must not be less than one hundred million (100,000,000) US dollars.
If the Organisation or its Parent Company is on the list of the world’s largest public companies in the Oil & Gas Operations according to Forbes (https://www.forbes.com/global2000/list/), clauses 9, 10 and 11 of the Requirements do not apply.

4) List of documents provided by Organisations to confirm they meet the Requirements:

Copy of the certificate (or other document) of state registration (re-registration) of a legal entity, extract from the Commercial Register or other document certifying that the applicant is a legal entity under the law of a foreign state; for a temporary association of legal entities (consortium), a copy of the consortium agreement and copies of the certificates (or other documents) of state registration (re-registration) of the consortium members.
Copy of the Articles of Association approved in accordance with the established procedure; for legal entities registered on the basis of model Articles of Association, a copy of the application of the established form for registration of a legal entity.
Information document containing details of the managers and their powers; information on the members (shareholders) with an indication of the size of their participation interest (shareholdings); information on legal entities, individuals, states and international organisations that control the applicant, whether directly or indirectly; information on the circulation of securities of the legal entity on the regulated securities market with an indication of the total number of such securities; information on subsidiaries.
Information on past activities, including a list of countries in which the Organisation has operated for the last three years.
Number and date of the subsoil use contract or other agreement under which the Organisation is carrying out or has carried out geological exploration / subsoil use operations.
List of key employees (management) of the Organisation with at least ten (10) years of experience in the oil and gas industry, CVs of such employees of the Organisation.
Copies of the audit reports for the period from 2020 to 2022 and a confirmation letter from the audit company on the financial position of the Organisation.
If the Organisation or its Parent Company is on the Forbes list of the world’s largest public companies in the Oil & Gas Operations, a letter from the Organisation or Parent Company with a confirmation link to the source of information referred to in clause 12 of the Requirements.
A written confirmation from the Organisation that all information provided in the documents is true and correct.

All the documents shall be drawn up in Kazakh and Russian. If the documents are submitted by a foreign legal entity, such documents may be drawn up in another language, in which case each document must be accompanied by a translation of the document into Kazakh and Russian, the accuracy of which shall be certified by a notary public.

5) Minimum requirements for the form of cooperation:

Cooperation on the basis of a Joint Venture.
The share of JSC NC “KazMunayGas” in the project shall not be less than 50 %.
The minimum work programme shall include drilling of two (2) exploration wells (the first well with a depth of 3,500 metres and the second well with a depth of 4,500 metres) and a 3D seismic survey of 432 square kilometers.

6) Procedure and deadline for Organisations to submit applications for the joint implementation of the new subsoil use project Bolashak:

Organisations shall submit their application with the documents confirming their compliance with the Requirements to the applicants attached not later than thirty (30) calendar days from the date of publication of the announcement on the search for a strategic partner for joint implementation of the new subsoil use project, Bolashak.

Address of JSC NC “KazMunayGas”: 8 Kunayev Street, Block B, Emerald Quarter Administrative Building, Essil District, Astana, 010000, Republic of Kazakhstan.

7) Conditions and procedure for identifying a strategic partner for the joint implementation of the Bolashak project:

After the expiry of thirty (30) calendar days from the date of publication of this announcement, the acceptance of applications from Organisations will be stopped, which will be noted on the corporate website of JSC NC “KazMunayGas”, www.kmg.kz.

Applications submitted by Organisations with the attached documents within the established deadlines will be reviewed by JSC NC “KazMunayGas” for compliance with the Requirements.

In the event of non-compliance with clause 12 of the Requirements, the Organisation or its Parent Company will be required to make a security deposit for participation in the process of identifying a strategic partner in the amount of one million US dollars (US$1,000,000) for the Bolashak Project, and use an escrow account or provide a bank guarantee or a guarantee from the Parent Company/Affiliate (with sufficient solvency) to secure the monetary obligations under the Bolashak Project. The security deposit paid for the participation will be refunded to the Organisation once the process of identifying a strategic partner has been completed or the search for a strategic partner has been considered failed.

Bank details of JSC NC “KazMunayGas”

Account Owner: JSC NC “KazMunayGas”

BIN 020240000555

Bank: Halyk Bank of Kazakhstan JSC

Account number (USD): KZ406010111000002040

Account number (KZT): KZ356010111000002033

Swift BIC: HSBKKZKX

CBe 16

* * *

The list of eligible Organisations will be published on the corporate website of JSC NC “KazMunayGas”, www.kmg.kz.

JSC NC “KazMunayGas” will send a Memorandum of Understanding and a Confidentiality Agreement to the eligible Organisations to be signed. These documents define the further procedure for attracting and identifying a strategic partner for the joint implementation of the new subsoil use project, Bolashak.

This announcement was published on the corporate website of JSC NC “KazMunayGas” on 13 of September 2023.

KMG: financial results for the 1st half of the year were affected by a decrease in oil prices by 26%

Wed, 23 Aug 2023 00:00:00 +0500

Despite the growth in production indicators a number of financial results of the Company showed a decrease due to the decline in oil prices by 26%. Moreover, according to the Deputy Chairman of the Management Board Aryssova D.A. in addition to the unfavorable price conditions the performance of JSC NC KazMunayGas was affected by regular power outages at production assets.

On 23 August 2023, JSC NC KazMunayGas held in an online format the Investor Day on operational and financial results for the first half of 2023 on the site of the Kazakhstan stock exchange KASE.

Summarizing of the results for the reporting period and a question-and-answer session were held by the Deputy Chairmen of the Management Board Aryssova D.A., Zakirov B.K., Makeev D.S. and Director of the Department for Oil and Gas Production Abylkhanov E.D.

The Investor Day is held by the Company for the first time after its IPO last year on the local exchanges KASE and AIX.

The production results of the first half of 2023 showed a positive trend. At the same time, the macroeconomic situation and decrease in the average price of Brent crude oil by 26,3% had an impact on financial performance.

In June of this year, the Company paid record dividends to its shareholders in the amount of 300 bln tenge or 491.71 tenge per ordinary share based on the results of 2022.

“With the acquisition of the status of a public company we are increasingly focused on an objective and timely coverage of KazMunayGas activities in order to build a trusting and transparent dialogue with all our stakeholders including our numerous shareholders and the investment community as a whole,” said Deputy Chairman of the Management Board Aryssova D.A.

Consolidated financial statements for the reporting period, financial press release and presentation are published on the Company's website as well as on the KASE and AIX exchanges.

«KazMunayGas» first half-year 2023 financial results

Tue, 22 Aug 2023 00:00:00 +0500

Joint-stock National Company KazMunayGas (“KMG” or Company), Kazakhstan's national oil and gas company, published its interim condensed consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) 34 "Interim Financial Statements" for the three and six months ended on 30 June 2023, with a report on the results of the review of interim financial information by an independent auditor.

Key financial indicators for the first half of 2023^[1] compared to the first half of 2022:

● Revenue amounted to 3,943 bln tenge (USD 8,726 mln) compared to 4,642 bln tenge (USD 10,315 mln);

● EBITDA amounted to 1,116 bln tenge (USD 2,470 mln) compared to 1,393 bln tenge (3,095 mln);

● The Company's net profit including share in income of joint ventures and associates amounted to 492 bln tenge (USD 1,088 mln) compared to 775 bln tenge (USD 1,722 mln);

● Net profit adjusted for share in profit of joint ventures and associates^[2], amounted to 266 bln tenge (USD 589 mln) compared to 352 bln tenge (USD 782 mln);

● Free cash flow amounted to 217 bln tenge (USD 481 mln) compared to 571 bln tenge (USD 1,268 mln);

● Gross debt as of 30 June 2023 amounted to 3,977 bln tenge (USD 8,788 mln) compared to 4,143 bln tenge (USD 8,956 mln) as of 31 December 2022;

● The Company's net debt as of 30 June 2023 was at 2,255 bln tenge (USD 4,983 mln) compared to 2,143 bln tenge (USD 4,632 mln) as of 31 December 2022.

Name of the indicator	UoM	1H 2023	1H 2022	%
Dated Brent^[3], average	$/bbl	79.66	107.94	-26.2%
Dated Urals³, average	$/bbl	53.86	84.86	-36.5%
KEBCO³, average	$/bbl	77.74	89.32	-
Exchange rate, average	KZT/USD	451.80	450.06	+0.4%
Revenue	bln tenge	3,943	4,642	-15.1%
Share in profit of JVs and associates, net	bln tenge	400	546	-26.8%
Dividends received from JVs and associates, net	bln tenge	174	123	+41.8%
Net profit	bln tenge	492	775	-36.6%
Net profit adjusted for the share in profit of JVs and associates	bln tenge	266	352	-24.3%
EBITDA^[4]	bln tenge	1,116	1,393	-19.9%
Adjusted EBITDA^[5]	bln tenge	891	970	-8.2%
CAPEX (accrual basis)	bln tenge	301	191	+57.9%
CAPEX (cash basis)	bln tenge	354	191	+85.7%
Free cash flow^[6]	bln tenge	217	571	-61.9%
Gross debt^[7]	bln tenge	3,977	4,143^[8]	-4.0%
Net debt^[9]	bln tenge	2,255	2,143⁸	+5.2%

Operating results for the first half of 2023 compared to the first half of 2022^[10]:

· The volume of oil and gas condensate production increased by 10.1% and amounted to 11,860 thousand tonnes;

· Oil transportation volumes increased by 5.8% and amounted 39,309 thousand tonnes;

· The volume of refining of hydrocarbons at Kazakhstani and Romanian refineries in aggregate increased by 4,0% and amounted 10,109 thousand tonnes.

	1H 2023 (net to KMG)	1H 2022 (net to KMG)	%
Oil production, thous. tonnes	11,860	10,774	+10.1%
Gas production, mln m³	4,789	4,110	+16.5%
Oil transportation, thous. tonnes	39,309	37,157	+5.8%
Oil refining, thous. tonnes	10,109	9,721	+4.0%

Financial Highlights for the first half of 2023

Revenue

Revenue amounted to 3,943 bln tenge (USD 8,726 mln), which is 15.1% lower compared to the first half of 2022.

Revenue dynamics were negatively impacted by a 26,2% decrease in the average Brent price for crude oil in the first half of 2023 compared to the first half of 2022.

Share in profit of joint ventures and associates

The share in income of joint ventures and associates decreased by 26,8% and amounted to 400 bln tenge (USD 885 mln), mainly due to a decrease in profits of “Tengizchevroil” LLP by 139 bln tenge (USD 310 mln), “Mangistau Investments B.V.” by 20 bln tenge (USD 45 mln) and “CPC” by 18 bln tenge (USD 40 mln).

EBITDA

EBITDA for the first half of 2023 amounted to 1,116 bln tenge (USD 2,470 mln), down 19.9% compared to 1,393 bln tenge (USD 3,095 mln) mainly due to a decrease in the segment of oil and gas exploration and production by 25.0%. The reduction was due to a decrease in the average Brent price for crude oil.

Adjusted EBITDA

Adjusted EBITDA, reflecting dividends received from joint ventures and associates, instead of share in income of joint ventures and associates, amounted to 891 bln tenge (USD 1,971 mln), showing a decrease of 8.2%.

Net profit

The Company's net profit decreased in comparison with the first half of 2022 by 36.6% and amounted to 492 bln tenge (USD 1,088 mln).

Net profit adjusted for share in profit of JVs and associates

Net profit adjusted for the share in profit joint ventures and associates decreased by 24.3% from 352 bln tenge (USD 782 mln) to 266 bln tenge (USD 589 mln).

Cost of purchased oil, gas, oil products and other materials

The cost of purchased oil, gas, oil products and other materials in the reporting period decreased by 23.3% and amounted to 2,162 bln tenge (USD 4,786 mln). The decrease in cost was largely due to a reduction in the cost of purchased oil for resale due to a decrease in the average oil price.

Operating expenses

Operating expenses increased by 19.8% and amounted to 590 bln tenge (USD 1,307 mln) largely due to the increase in salary costs for employees in the regions of presence and costs for short-term leases.

Transportation and distribution costs amounted to 120 bln tenge (USD 265 mln), up 21.7% compared to the first half of 2022. An increase in costs was mainly due to an increase in the volume of sales of petroleum products of KMG International as well as due to an increase in the sales volume of KMG Kashagan B.V.

General and administrative expenses increased by 5.9% and amounted to 72 bln tenge (USD 160 mln) due to an increase in payroll costs.

Taxes other than income tax decreased by 11.4%, amounted to 282 bln tenge (USD 625 mln), mainly due to a decrease in the cost of rent tax on crude oil export and mineral extraction tax due to lower oil prices.

Finance costs remained unchanged, amounting to 157 bln tenge (USD 346 mln).

Impairment of property, plant and equipment and intangible assets

As of 30 June 2023, due to the impairment indicators presence, in particular, increased refining margins volatility in the oil and gas market, KMG International conducted an impairment test for property, plant and equipment and intangible assets and recorded a loss of 95.0 bln tenge.

In addition, in June 2023, a fire broke out at a light hydrocracking unit at the Petromidia refinery, a subsidiary of KMG International. An impairment loss of property, plant and equipment in the amount of 3.7 bln tenge was recorded based on the results of the assessment.

The total amount of loss from impairment of fixed assets for the KMG group amounted to 98.9 bln tenge.

Capital expenditures

The Company's capital expenditures (accrual basis, disclosed in segment reporting) amounted to 301 bln tenge (USD 667 mln), an increase of 57.9% mainly due to well drilling expenditures in Ozenmunaigas JSC, Embamunaigas JSC, KMG Karachaganak LLP and replacement of the section of the pipelines "Uzen-Atyrau-Samara", the reconstruction and expansion of the "Astrakhan-Mangyshlak" main water pipeline.

Free cash flow

Free cash flow amounted to 217 bln tenge (USD 481 mln) compared to 571 bln tenge (USD 1,268 mln) in the first half of 2022. The decrease was associated with a decrease in oil prices in the period, as well as an increase in capital expenditures.

Debt management

Debt indicators

Name of the indicator	UoM	30 June 2023	31 Dec. 2022	%
Bonds	bln tenge	3,020	3,282	-8.0%
Loans	bln tenge	957	862	+11.0%
Gross debt	bln tenge	3,977	4,143	-4.0%

Numbers may not add up due to a rounding.

Total debt as of 30 June 2023 was 3,977 bln tenge (USD 8,788 mln), a decrease in tenge by 4.0% and by 1.9% in US dollar terms compared to 31 December 2022.

In the first half of 2023, the increase in KMG loans was mainly associated with the attraction of a syndicated loan in the amount of USD 310 mln (equivalent to 140 bln tenge) by KMG International for the working capital financing.

In order to reduce the debt burden, in April 2023, KMG carried out a full early repayment of Eurobonds due in 2025 in the amount of USD 500 mln.

Net debt

Net debt as of 30 June 2023 was 2,255 bln tenge (USD 4,983 mln), an increase in tenge by 5.2% and in US dollar terms by 7.6% in comparison to the volume as of 31 December 2022.

Cash and cash equivalents

Consolidated cash and cash equivalents including deposits

Name of the indicator	UoM	30 June 2023	31 Dec. 2022	%
Cash and cash equivalents	bln tenge	1,070	763	+40.2%
Short-term deposits	bln tenge	593	1,178	-49.7%
Long-term deposits	bln tenge	59	59	-0.7%
Cash and cash equivalents including deposits	bln tenge	1,722	2,000	-13.9%

Numbers may not add up due to a rounding.

Consolidated cash, cash equivalents, including cash in the form of deposits as of 30 June 2023 decreased by 13,9% % compared to the indicator as of 31 December 2022 and amounted to 1,722 bln tenge (USD 3,805 mln). In US dollar terms, the indicator decreased by 12,0% compared to USD 4,323 mln as of 31 December 2022.

Key corporate events from the beginning of 2023:

● On 9 March 2023, Standard&Poor's rating agency confirmed the Company's rating at BB+, revising the outlook to stable, which reflects the agency's rating action in relation to Kazakhstan (the rating was confirmed at BBB-, the forecast was revised to stable).

● In 26 April 2023, KMG made a full early repayment of Eurobonds due in 2025 in the amount of USD 500 mln.

● On 27 April 2023, KMG issued bonds in the amount of 50 bln tenge with a term of 10 years and an interest rate of 0.5% in order to finance the project “Reconstruction and expansion of the main water pipeline “Astrakhan-Mangyshlak” 1^st stage”.

● On 3 May 2023, the Standard&Poor's rating agency raised the probability of government support from "high" to "very high", the Company's rating remained unchanged.

● On 21 June 2023, KMG issued a guarantee in favor of the Eurasian Development Bank as security for the fulfillment of obligations of Kazakhstan Petrochemical Industries Inc. LLP (the amount of the credit line is USD 150 mln, the loan term is 3 years).

● On 21 June this year, at the Petromidia refinery in Constanta (Romania), a fire broke out at a light hydrocracking unit after special maintenance work was carried out. The firemen managed to localize the fire and take the situation under full control even before the arrival of special vehicles of the Inspectorate for Emergency Situations. Now actions are being taken according to the corrective action plan. The planned launch date of the unit is autumn 2023.

● On 22 June 2023, Fitch Ratings upgraded KMG's credit rating from BBB- to BBB with a stable outlook, against the background of an increase in the rating of creditability. KMG's rating was equated to Kazakhstan's sovereign rating.

● On 26 June 2023, KMG completed the payment of dividends to shareholders for 2022. The total amount of dividends was 300.0 bln tenge. The dividends per common share amounted to 491.71 tenge.

● Since the beginning of 2023, new appointments have been made in the structure of the Board of Directors and the Management Board of KMG. As of August 2023, the Board of Directors of KMG consists of 8 people (Berdigulov Ye.K. – Chairman of the Board of Directors, Otynshiyev E.M., Karabalin U.S., Mirzagaliyev M.M., Zhubayev A.S., Argingazin A.A., Holland P.M., Mynsharipova S.N.), the Management Board of KMG consists of 9 people (Mirzagaliyev M.M. – Chairman of the Management Board, Abdulgafarov D.Ye., Zakirov B.K., Lavrenov V.S., Makeyev D.S., Aryssova D.A., Brekeshev S.A., Kudaibergenov K.M., Khasanov D.K.).

● After the reporting period, on 3 July 2023, due to an accident at the 1^st power unit of the Mangistau Nuclear Power Plant (MAEK), the Atyrau Refinery was shut down. As a result of the power outage, all process units at the Atyrau Refinery were safely shut down. To prevent an emergency and ensure the safety of personnel, according to the accident elimination algorithm, hydrocarbon gas from all units was sent to the flare. As the supply of electricity from external networks stabilized, the process units of the plant began to be brought to a stable mode, and already on 6 July, the Atyrau Refinery was restarted.

● In general, during recent years, there has been an increase in the number of emergency power outages at KMG fields by MAEK, which negatively affects the production volumes of upstream assets: Ozenmunagas, Mangistaumunaigas, Embamunaigas, Karazhanbasmunai.

For further information, please visit

https://www.kmg.kz/ru/investors/reporting/

Contacts:

ir@kmg.kz

Tel: +7 (7172) 78 64 34

About JSC National Company KazMunayGas:

KMG’s main assets are as follows:

Upstream: Ozenmunaigas (OMG) – 100%, Embamunaigas (EMG) – 100%, Kazakhturkmunai (KTM) – 100%, KazMunayTeniz – 100%, Urikhtau (UO) – 100%, Mangistaumunaigaz (MMG) – 50%, Kazgermunai (KGM) – 50%, Karazhanbasmunai (KBM) – 50%, KazakhOil Aktobe (KOA) – 50%, Petrokazakhstan Inc (PKI) – 33%, Tengizchevroil (TCO) – 20%, Kashagan – 16.88%, Karachaganak (KPO) – 10%.

Midstream: KazTransOil – 90%, Kazakhstan China Pipeline (KCP) – 50%, Munai Tas – 51%, Batumi Oil Terminal – 100%, CPC – 20.75%, Kazmortransflot – 100%.

Downstream: Pavlodar refinery – 100%, Atyrau refinery – 99.53%, Shymkent refinery – 49.72%, KMG International – 100%, Petromidia refinery – 54.63%, Vega refinery – 54.63%, Petromidia refinery – 54.63%, Vega refinery – 54.63%, KazRosGas – 50%, Kazakhstan Petrochemical Industries Inc. – 49.5%, Silleno – 49.9%

^[1] The amounts were converted to US dollars for user convenience at average exchange rates for respective periods (average USD/KZT for the first half of 2023 and 2022 were at 451.80 and 450.06 respectively; period-end USD/KZT as of 30 June 2023 and 31 December 2022 were at 452.51 and 462.65 respectively

^[3] Source: S&P Global Platts. The start of quotations for KEBCO oil from 06/06/2022.

^[7] Total debt at the end of the reporting period = bonds plus loans (short-term and long-term). Guarantees issued are not included in the calculation.

^[8] Gross debt and Net debt are shown as of December 31, 2022.

^[10] Production results are stated in accordance with KMG's shareholdings in joint ventures and associates and 100% for consolidated subsidiaries. More detailed information is available in the press release on production results for the first half of 2023 at the link: https://www.kmg.kz/upload/iblock/94f/vygyy8381cjbusg17yzu75mmg13casrl/1H%2023%20Operating%20press-release%20ENG.pdf

Investor Day at KASE in an online format on the operational and financial results of JSC NC "KazMunayGas" for the first half of 2023

Fri, 18 Aug 2023 00:00:00 +0500

KASE will host an online Investor Day dedicated to the operational and financial results of JSC NC KazMunayGas (Company) for the first half of the year 2023 on 23 August 2023 at 11:00 Astana time / 05:00 GMT time / 01:00 EDT time.

The results of the reporting period will be presented by the Company's management.

To participate in the event, fill out the registration form at the link:

https://us06web.zoom.us/webinar/register/WN_5QcAYD9QTUqiGtgKil56zQ

Dial-in details will be sent to you by email after the registration.

The Investor Day will be held for investors, professional participants in the securities market, media representatives and other interested parties.

Consolidated financial statements for the first half of 2023, financial press release and presentation will be published closer to the date of the event on the Company's website at:

https://www.kmg.kz/en/investors/reporting/

For questions, contact the Investor Relations Team

by tel. +7 (7172) 78 64 34, e-mail: ir@kmg.kz

About company:

NC «KazMunayGas» JSC announces changes in the composition of the Board of Directors

Mon, 14 Aug 2023 00:00:00 +0500

Following the results of the Extraordinary General Meeting of Shareholders (EGM) of NC “KazMunayGas” JSC (KMG) held today, Yernat Kudaibergenovich Berdigulov was elected the Chairman of the KMG’s Board of Directors (BoD).

Ye. Berdigulov received a Bachelor of Science in Public Policy and International Studies from the University of Toronto (Canada) in 2010, a Master of Science in Business Administration from the University of Warwick (UK) in 2018, and is currently studying at the Harvard Institute for Leadership Development (USA).

Ye. Berdigulov previously worked as a project manager at Whiteshield Partners, also held the position of Co-Managing Director for Strategy, Sustainability and Digitalization at JSC “Samruk-Kazyna”, and currently holds the position of the Managing Director for Strategy and Asset Management at JSC “Samruk-Kazyna”.

Former Chairman of the KMG BoD, Independent Director Christopher Walton resigned from the BoD in accordance with the Corporate Governance Code of KMG, as he had been an Independent Director on the KMG BoD for more than 9 years.

Christopher Walton noted: “It has been a pleasure to be the Chairman of KMG’s Board of Directors, working with three excellent Chairmen of the Management Board and a strong management team. I am proud of what has been achieved, particularly the improvements in governance, safety and financial stability. I leave KMG with a stable and solid foundation for the future."

Commenting on the above, Magzum Mirzagaliyev, the Chairman of the KMG Management Board, said: “Chris has made a valuable contribution to the development of KMG during his 6 years as the Chairman. He has led by providing the right and timely “tone from the top”. He leaves his post with our thanks and best wishes for the future.”

Members of the KMG BoD Ye.M. Otynshiyev, U.S. Karabalin, M.M. Mirzagaliyev, A.S. Zhubayev, A.A. Argingazin, and P.M. Holland were re-elected based on the results of the EGM. Also, based on the results of the EGM, Saya Naymanbaikyzy Mynsharipova was elected an Independent Director of the KMG BoD.

Thus, the new composition of the KMG BoD is as follows:

1. Yernat Kudaibergenovich Berdigulov, the Chairman of the KMG BoD, representative of interests of JSC “Samruk-Kazyna”;

2. Yelzhas Muratovich Otynshiyev, representative of interests of JSC “Samruk-Kazyna”;

3. Uzakbay Suleimenovich Karabalin, representative of interests of JSC “Samruk-Kazyna”;

4. Magum Maratovich Mirzagaliyev, the Chairman of the Management Board of NC “KazMunayGas” JSC;

5. Armanbay Saparbayevich Zhubayev, Independent Director;

6. Arman Anuarbekovich Argingazin, Independent Director;

7. Phillip Malcolm Holland, Independent Director;

8. Saya Naymanbaikyzy Mynsharipova, Independent Director.

KazMunayGas will be hosting an Open Day event on the Gas Turbine Power Plant project at Atyrau Refinery

Fri, 04 Aug 2023 00:00:00 +0500

JSC NC "KazMunayGas" together with Atyrau Refinery LLP, as part of the implementation of the 154 MW GTPP Construction project to improve the reliability of the Atyrau Refinery's external power supply (hereinafter referred to as the ANPZ GTPP Project), announces the holding of an "Open Door Day on the ANPZ GTPP Project" for potential investors and interested companies on August 17-18, 2023 in Atyrau.

During this event, with the participation of all interested parties, it is planned to discuss topical issues on the Project, visit and inspect a potential construction site, a question and answer session with specialists and experts in the area.

To participate in the event, it is necessary to send an application by 13.08.2023, indicating the full name, name of the organization, position to the e-mail addresses n.nurgaliyev@anpz.kz (Nurgali Nurgaliev, mob.: +7 777 498 9999), n.galymzhanov@kmg.kz (Nursultan Galymzhanov, mob.: +7 701 773 7083).

Appendix: The program of the "Open Day for the ANPZ GTPP project" in Atyrau.

JSC NC KazMunayGas 1H of 2023 Trading Update

Tue, 01 Aug 2023 00:00:00 +0500

Joint-stock (JSC) National Company (NC) KazMunayGas (“KMG” or “Company”), Kazakhstan's national oil and gas company, announces its operating results for the first half of 2023.

Highlights for the first half of 2023:

Oil and gas condensate production increased by 10.1% and amounted to 11,860 thous. tonnes;
Oil transportation volumes increased by 5.8% and amounted to 39,309 thous. tonnes;
Hydrocarbons refining volumes at the Kazakh and Romanian refineries are increased by 4.0% and amounted to 10,109 thous. tonnes.

	1H 2023 (net to KMG)	1H 2022 (net to KMG)	%
Oil production, thous. tonnes	11,860	10,774	+10.1%
Gas production, mln m³	4,789	4,110	+16.5%
Oil transportation, thous. tonnes	39,309	37,157	+5.8%
Oil refining, thous. tonnes	10,109	9,721	+4.0%

Operating results are represented in accordance with KMG's ownership interest in joint ventures and associates and 100% of results for consolidated subsidiaries, unless otherwise stated.

Upstream

Oil and gas condensate production volume for the first half of 2023 amounted to 11,860 thous. tonnes (494 kbopd) representing an increase of 10.1%. Production volume of associated and natural gas raised by 16.5% to 4,789 mln m³.

Oil and condensate production, thous. tonnes	1H 2023 (net to KMG)	1H 2022 (net to KMG)	%
OMG	2,474	2,501	-1.1%
MMG	1,538	1,474	+4.3%
EMG	1,325	1,267	+4.6%
Tengiz	2,981	2,867	+4.0%
Kashagan¹	1,536	601	+155.4%
Karachaganak	549	549	+0.1%
Others	1,457	1,514	-3.8%
Total	11,860	10,774	+10.1%
¹ KMG’s share in the project increased to 16.88% after 15 September 2022

Oil production at Tengiz increased by 4.0% compared to the production volume for the same period last year and amounted to 2,981 thous. tonnes (131 kbopd). The growth is associated with changes in production targets, as well as production restrictions last spring due to the incidents with CPC. Associated gas production increased by 3.6%, amounting to 1,656 mln m³.

A significant increase in oil production at Kashagan is associated with an increase in KMG's share in the project from 8.44% to 16.88% as a result of the completion of a deal to buy back a 50% stake in KMG Kashagan B.V. from Samruk-Kazyna JSC in September last year, as well as with the planned overhaul of the offshore and onshore complexes carried out in June 2022 and the launch of the upgraded 2 sour gas injection compressors, launched in August and September last year. Oil and gas production at Kashagan net to KMG amounted to 1,536 thous. tonnes (67 kbopd) and 976 mln m³, respectively, showing an increase of 155.4% and 162.2%, respectively.

Oil and condensate production at Karachaganak remained almost unchanged at 549 thous. tonnes (24 kbopd). Gas production increased by 5.6% and amounted to 1,109 mln m³, the increase in sour gas production with the unchanged oil and condensate production was due to an increase in the gas factor at the field.

The volume of oil and condensate production at operating assets increased by 0.5% to 6,794 thous. tonnes (272 kbopd). The increase in oil and condensate production occurred at the Embamunaigas and Mangistaumunaigaz fields due to successfully completed geological and technical activities for drilling, well workover and hydraulic fracturing. At the same time, a decrease in the level of production was observed in Kazgermunai on the back of a natural decline in production due to the maturity of its deposits. Gas production decreased by 3.8% to 1,047 mln m³ mainly due to a decrease in well efficiency at Kazakhturkmunai following a fouled line between wells and receiving units.

Midstream

The total volume of oil trunk pipelines and sea transportation increased by 5.8% to 39,309 thous. tonnes.

Oil transportation, thous. tonnes	1H 2023 (100%)	1H 2023 (net to KMG)	1H 2022 (net to KMG)	%
KazTransOil	21,353	21,353	19,959	+7.0%
Kazakhstan-China Pipeline	9,287	4,644	4,864	-4.5%
MunaiTas²	2,731	1,393	1,337	+4.2%
Caspian Pipeline Consortium	32,210	6,684	6,325	+5.7%
Kazmortransflot	5,235	5,235	4,673	+12.0%
Total	-	39,309	37,157	+5.8%
¹ Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation. ² Munaitas is an equity-consolidated joint venture and transportation volumes are quoted at a 51% ownership interest.

The volume of oil transportation through trunk pipelines increased by 4.9% and amounted to 34,073 thous. tonnes. The main growth was due to an increase in the volumes of Kashagan and Tengiz through the KazTransOil system in the direction of Samara and the CPC system, as well as the oil transportation in the direction of the Aktau port.

The total volume of maritime oil transportation increased by 12.0% to 5,235 thous. tonnes, the increase in the reporting period was mainly due to the restoration of the volume of oil transported through the CPC in the direction of the Midia port (Romania) through the Black Sea.

Trading

Sales volumes of KMG's own produced oil and gas condensate increased by 12.5% and amounted to 12,164 thous. tonnes, of which 65.3% was exported.

Supplies of own produced oil and gas condensate volumes to cover the needs of the domestic market amounted to 4,215 thous. tonnes, including deliveries of crude oil from operating assets (Ozenmunaigas, Embamunaigas, Kazakhturkmunai and Urikhtau Operating) in the amount of 2,515 thous. tonnes to Atyrau, Shymkent and Pavlodar refineries for further oil refining and sales of oil products.

Downstream

Hydrocarbon refining, thous. tonnes	1H 2023 (net to KMG)	1H 2022 (net to KMG)	%
Atyrau refinery	2,881	2,681	+7.5%
Pavlodar refinery	2,772	2,839	-2.4%
Shymkent refinery¹	1,380	1,518	-9.1%
Caspi Bitum¹	201	211	-4.5%
Petromidia	2,681	2,310	+16.1%
Vega	193	163	+18.5%
Total	10,109	9,721	+4.0%
¹ Shymkent refinery and Caspi Bitum refining volumes are indicated at a share of 50%

The total volume of hydrocarbon processing increased by 4.0% compared to the same period in 2022 and amounted to 10,109 thous. tonnes:

The volume of hydrocarbon refining at Kazakhstani refineries slightly decreased by 0.2% and amounted to 7,234 thous. tonnes. Shymkent and Pavlodar refineries showed decrease in processing volumes due to scheduled preventive repairs in the current year. At the same time, this decrease was offset by an increase in processing volumes by 200 thous. tonnes at the Atyrau Refinery.
The refining volume at the KMG International refineries (Petromidia, Vega) in Romania increased by 16.2% and amounted to 2,875 thous. tonnes. The increase in refining volumes in the reporting period was due to a long shutdown of the Petromidia refinery for scheduled maintenance of last year and an increase in demand for oil products in the reporting period. The light hydrocracking unit caught fire at the Petromidia refinery in Constanta following special maintenance work on June 21 of this year. Refinery’s’ firemen managed to localize the fire and take the situation under full control even before the arrival of special vehicles of the Inspectorate for Emergency Situations. Currently, activities are being carried out according to the Corrective Action Plan. The planned launch date for the plant is autumn 2023.

The volume of production of oil products at Kazakh and Romanian refineries increased by 3.9% and amounted to 9,315 thous. tonnes:

Kazakhstani refineries produced 6,519 thous. tonnes of oil products, which is 0.4% less than in the same period in 2022 due to the shutdown of the Shymkent refinery and Pavlodar refinery for scheduled preventive maintenance;
Refineries of KMG International (Petromidia, Vega) produced 2,796 thous. tonnes of oil products, which is 15.5% higher than in the same period of last year. The increase in indicators was due to a corresponding increase in refining volumes at the Petromidia refinery.

After the accident at the 1st power unit of the Mangistau nuclear power plant on 3 July 20233 afterof the reporting year period the Atyrau refinery was shut down. As a result of the power outage, all process units at the Atyrau Refinery were safely shut down. To prevent an emergency and ensure the safety of personnel, according to the accident elimination algorithm, hydrocarbon gas from all units was sent to the flare. As the supply of electricity from external networks stabilized, the process units of the Atyrau Refinery came to the stable mode and the plant was restarted on July 6.

For further information, please visit http://www.kmg.kz

Contacts: Email: ir@kmg.kz, Tel: +7 7172 78 64 34

About JSC National Company KazMunayGas:

KMG’s main assets are as follows:

Upstream: Ozenmunaigas (OMG) — 100%, Embamunaigas (EMG) — 100%, KazakhTurkmunai (KTM) — 100%, KazMunayTeniz — 100%, Urikhtau (UO) — 100%, Mangistaumunaigaz (MMG) — 50%, Kazgermunai (KGM) — 50%, Karazhanbasmunai (KBM) — 50%, KazakhOil Aktobe (KOA) — 50%, PetroKazakhstan Inc (PKI) — 33%, Tengizchevroil (Tengiz) — 20%, Karachaganak — 10%, Kashagan — 16.88%.
Midstream: KazTransOil — 90%, Kazakhstan China Pipeline (KCP) — 50%, Munai Tas — 51%, Batumi Oil Terminal — 100%, Caspian Pipeline Consortium (CPC) — 20.75%, Kazmortransflot — 100%.
Downstream: Pavlodar refinery — 100%, Atyrau refinery — 99,53%, Shymkent refinery — 49,72%, KMG International — 100%, Petromidia — 54,63%, Vega — 54,63%, KazRosGas — 50%, Kazakhstan Petrochemical Industries Inc — 49.5%.

KazMunayGas twice improves its performance in environmental disclosure for investors

Fri, 28 Jul 2023 00:00:00 +0500

Right before the CDP's environmental disclosure, the World Benchmarking Alliance published the Oil and Gas Benchmark 2023 rating based on the assessment of low-carbon transition (ACT) and social performance among 100 key oil and gas companies all over the world. In 2023, KazMunayGas was the 37th — up from 77th in 2022.

The rating details are available at: worldbenchmarkingalliance.org.

On 25 July, JSC NC “KazMunayGas” (KMG, the Company) voluntarily published its 2022 report on greenhouse gas emissions and water management, as part of the global Carbon Disclosure Project (CDP) climate initiative.

Improving the international environmental reporting is one of the priorities for implementation of the approved KMG 2022-2031 Low-Carbon Development Program. KazMunayGas voluntarily discloses the volumes of direct and indirect greenhouse gas emissions, its assets' water management, makes independent verification, and shares its corporate climate change and water conservation strategy, the effectiveness of greenhouse gas emissions and water management, key risks and opportunities with the international community.

This year, KMG also proceeds with the implementation of environmental financial disclosure based on the principles of TCFD (Task Force on Climate-Related Financial Disclosures), with a focus on the assessment of climate-related risks and their financial impact on the company's business.

These activities are to support the sustainability reporting and implementation of ESG principles. Free access of environmental information and transparency of the Company's environmental activities to the public, shareholders, concerned government authorities and other parties is one of the basic principles of KMG's Environmental Policy and Sustainable Development Policy. The Company reports that this year it is developing a long-term KMG Group Water Management Program.

CDP questionnaires are available at: kmg.kz.

Background:

About the Carbon Disclosure Project

The Carbon Disclosure Project (CDP), which has been in existence since 2000, has become the gold standard for greenhouse gas emission disclosure method and procedure. It is the most important source of climate change data for the global market. CDP’s electronic carbon reporting database is the world’s largest register of the most comprehensive information on corporate greenhouse gas (GHG) emissions and corporate climate change strategies that investors use when making investment decisions. CDP is made up of more than 700 investors with more than $130 trillion in assets.

KAZENERGY discussed the issues of implementation of the best available techniques in the ecology and oil & gas industry

Wed, 26 Jul 2023 00:00:00 +0500

The seventh regular meeting of the Coordination Board on Environment and Low-Carbon Development (hereinafter - Coordination Board) of the KAZENERGY Association chaired by the Deputy Chairman of the KazMunayGas Management Board Serikkali Brekeshev was held on July 14, 2023.

The Coordination Board members had 2 agenda items to be addressed:

Analysis of the oil and gas companies' comments and proposals to the draft Oil and Gas Production BAT (Best Available Techniques) Reference Book;
Need of a BAT Reference Book to regulate and organize the automated emissions monitoring system at the main stationary emission sources of the Category I facilities (hereinafter - AMS).

A number of technical proposals of the business representatives were taken into account in the course of Oil and Gas Production Reference Book development and included in the Reference Book.

At the same time, as the Chairman of the Coordination Board Serikkali Brekeshev noted, there is not so much time left for the development of the project documents: the program on environmental efficiency improvement and feasibility study of technological standards to get the integrated environmental permit by the end of 2024.

In this regard, it was noted that the outstanding Reference Book issues should be addressed as soon as possible, including:

exclusion of methane from the list of marker substances with technological standards specification;
regulation of flare installations with mandatory (closed type) constructions;
high pollutants concentrations in hot water boilers and diesel generators.

Based on the speakers' presentations, the Coordination Board took note of the oil and gas companies' comments and proposals to the draft BAT Oil and Gas Production Reference Book and information on sharing the BAT Reference Book development and implementation experience with the EU countries and the USA, instructions were given to the KAZENERGY Association to continue joint activities with the International Green Technologies and Investment Projects Center on the BAT Reference Book development and approval, as well as to work out the industry's position regarding the need to develop a BAT Reference Book, regulating the AMS organization.

KMG Group's Successor Pool: the Mansap Project

Thu, 13 Jul 2023 00:00:00 +0500

On the 4th of July, an event on the "C" pool training programs launching was held in Astana for KazMunayGas Group (KMG) Successor Pool under the Mansap Project.

The meeting was attended by the KMG and its subsidiaries employees – chief executive staff candidates qualified in the "A" (top management) pool, as well as the "B" (middle-rank managers) and "C" (principal and lead specialists) pool candidates.

KMG Chief of Staff Yerkhan Umarov addressed the audience with a welcoming speech. He noted that the Mansap Project has been existing since 2020 when and as instructed by the company' Board of Directors Nomination and Remuneration Committee. The project idea is to form a candidates pool in pursuance of the Human Resources Development Strategy and to raise the KazMunayGas Group management staff competencies as well as to push promotion of active and talented leaders among employees.

Since the project was launched, top and middle-rank managers have passed the trainings in Project Management, Management and Communication Changes, Leadership and other disciplines. Largely due to participation in the program, some of them have already been promoted.

The event included awards of the leadership educational programs completion certificates for "A" and "B" pools and launching of the "Mentoring: Succession in Action" program. The "Koshbasy School – School of Leaders" development program was officially launched for the "C" pool and the opportunity to participate in the "Green Office" project to develop the project management skills was also given. In 2021, 65 employees were qualified from among 200 candidates for this level pool, and at the last session their teamwork skills in mathematical, logical and communicative tasks were trained.

In the immediate future, active work over professional and personal qualities is ahead of the "C" pool participants so that they can realize their leadership potential.

KazMunayGas publishes the 2022 Sustainability Report “Humanizing energy — Inspired by the Energy of People”

Mon, 03 Jul 2023 00:00:00 +0500

JSC NC “KazMunayGas” (KMG) annually publishes the Sustainability Report, which is the Company’s message about its progress under the United Nations Global Compact and the Company’s progress towards the achievement of the global Sustainable Development Goals.

In June this year, KMG’s Board of Directors approved the verified 2022 Sustainability Report. The report was prepared in accordance with the GRI Standards 2021, the updated international reporting standards in sustainable development, and underwent the procedure of independent certification by the audit company, as well as verification by GRI Services (Global Reporting Initiative) for the correct disclosure - Content Index - Essentials Service with Sector Standard Add-on.

The 2022 Sustainability Report discloses the key economic, environmental and social performance indicators for the period from 2020 to 2022, includes information about the activities on significant aspects of sustainable development: our initiatives on social stability, health, safety and environment, staff development, and engagement with local communities. The slogan of the Report, “Humanizing energy - Inspired by the Energy of People”, reflects the primary focus of the Report on the Company’s human resources, which is our motive force. The Report keeps special focus on the Company’s employees, observance of human rights and development of the regions of presence, and each of the sections mentions the best employees of our Company’s SDEs in these areas.

Recognizing the importance of consideration of the stakeholders’ interests, we annually collect feedback on the Report. This practice helps us improve the content and scope of the Report, as well as raise the awareness of the employees and other stakeholders on the Company’s sustainable development matters.

On the completion of the payment of dividends on shares of JSC NC «KazMunayGas» for 2022

Tue, 27 Jun 2023 00:00:00 +0500

Joint-stock company “National Company “KazMunayGas” (KMG) would like to advise hereby, of the completion of the distribution of dividends on KMG NC’s shares for 2022.

Date of distribution: 26 June 2023;
Period for which these dividends on the shares were distributed: from 1 January through 31 December 2022;
Amount of a dividend per common share: 491.71 (four hundred and ninety-one) tenges 71 (seventy-one) tiyns.
Total amount of dividends payable to the shareholders: 300,001,855,903.03 (three hundred billion one million eight hundred and fifty-five thousand nine hundred and three) tenges 3 (three) tiyns;
Total amount of dividends actually paid to the shareholders: 300,001,855,903.03 (three hundred billion one million eight hundred and fifty-five thousand nine hundred and three) tenges 3 (three) tiyns;
Holder record date for the payment of this consideration: 0.00 A.M. on 31 May 2023.

Resolution on the distribution of dividends was validated by KMG NC's general meeting of shareholders on 30 May 2023 (minutes No. 2/2023).

Fitch Ratings upgrades JSC NC KazMunayGas’s rating to “BBB”, outlook “Stable”

Fri, 23 Jun 2023 00:00:00 +0500

22 June, 2023, Fitch Ratings has upgraded JSC NC KazMunayGas’s (KMG) long-term issuer default rating from “BBB-” to “BBB”, outlook “Stable”.

The upgrade is driven by an upward revision of the KMG’s standalone credit profile from “bb-” to “bb” due to material deleveraging, consolidation contribution of KMG Kashagan B.V. and high level of state support.

As a result of the revision, KMG’s rating is now equalised with the sovereign rating of the Republic of Kazakhstan.

Procedure for payment of dividends to shareholders of JSC NC “KazMunayGas”

Wed, 14 Jun 2023 00:00:00 +0500

Dividends are payable to the bank accounts of the shareholders and/or nominee holders specified in the database of Central Securities Depository JSC.

Shareholders may get the information about dividends payment from the servicing broker. In case the shareholder's actual payment details are not available, the dividends payable will be transferred to his/her special unclaimed cash account opened in the accounting system of Central Securities Depository JSC.

To get the dividends in accordance with the established procedure, shareholders should apply to the servicing brokerage office and certify the details correctness either to update them, if applicable.

Voting results of the annual General Meeting of Shareholders of JSC NC "KazMunayGas"

Fri, 09 Jun 2023 00:00:00 +0500

June 9, 2023

Voting results of the annual General Meeting of Shareholders of JSC NC "KazMunayGas"

National Company “KazMunayGas” JSC (hereinafter – NC “KazMunayGas” JSC, KazMunayGas, KMG or the Company) has published the results of voting on each key issue included in the agenda of the meeting of the annual General Meeting of Shareholders (hereinafter – AGMS) held on May 30, 2023. The voting results were summed up on June 2, 2023.

At the time of the AGMS, the total number of outstanding shares was 610,119,492. According to the list of shareholders as of April 29, 2023, as well as information about the owners of shares in nominee holding, the total number of voting shares of the Company amounted to 591,819,316 ordinary shares, which is 97% of the total number of the Company’s voting shares voted at the AGMS.

The notice of the AGMS was published on April 28, 2023. Materials on the issues on the agenda of the AGMS were available to shareholders for review no later than 10 (ten) working days before the date of the AGMS. No queries on the materials of the AGMS were received from shareholders within the established time frame.

Shareholders voted and decisions were made on each key issue included in the agenda of the AGMS meeting.

Decisions	For	%	Against	%	Abstained	%
1. On the composition of the Board of Directors of NC “KazMunayGas” JSC.	591,819,316	0.00%	0	0.00%	0	0.00%
2. On approval of the annual financial statements of NC “KazMunayGas” JSC for 2022.	591,819,316	0.00%	0	0.00%	0	0.00%
3. On the order of distribution of the net income of NC “KazMunayGas” JSC for 2022 and the dividend amount per common share of NC “KazMunayGas” JSC.	591,819,316	0.00%	0	0.00%	0	0.00%
4. Appeals from shareholders about actions committed in 2022 by NC “KazMunayGas” JSC or any of its officers, and results of consideration of those.	591,819,316	0.00%	0	0.00%	0	0.00%
5. On approval of the new version of the Charter of NC “KazMunayGas” JSC.	591,819,316	0.00%	0	0.00%	0	0.00%
6. On approval of the new version of the Regulation on the Board of Directors of NC “KazMunayGas” JSC.	591,819,316	0.00%	0	0.00%	0	0.00%
7. On amending the decision of the entity holding all the voting shares of NC “KazMunayGas” JSC dated 20 January 2022 (Minutes No.05/22) on the issue “On determining audit firm performing audit of the financial statements of NC “KazMunayGas” JSC for 2022-2024 and the amount of payment for its services”.	591,819,316	0.00%	0	0.00%	0	0.00%

On the approval of the annual financial statements for 2022

KMG's annual financial statements for 2022 were approved based on the results of voting at the AGMS.

The consolidated financial statements, as well as the Company’s financial and operational results for 2022 were published and discussed during a public call held by the Company on March 15 of this year.

On the payment of dividends for 2022

Shareholders, guided by the Company’s dividend policy, based on the audited financial results for 2022, approved dividend payment in the amount of 491,71 tenge (four hundred ninety one tenge seventy one tiyn) per one ordinary share of KazMunayGas, to be paid from 2022 net income. The total amount of dividends to be paid is equivalent to approximately 300 billion tenge.

The payment of dividends based on the 2022 results will begin on June 20, 2023 to shareholders of record as of May 31, 2023 at 00:00 local time (GMT + 6).

On the composition of the Board of Directors of NC KazMunayGas JSC

Based on the voting results of the AGMS, the powers of Independent Director Timothy Glen Miller were terminated ahead of schedule, with the election of Arman Argingazin as a new KMG’s Board member. The Board is therefore currently composed of 8 (eight) members

As a new Independent Director with 8 years of experience in areas such as organization of transactions in the debt capital markets, equity capital markets, as well as support and organization of transactions on mergers and acquisitions, Mr. Argingazin certifies that there are no such details to be disclosed in accordance with sub-clause d), e), f) and g) of clause 1.6 of Guide to Continuing Obligations of Companies admitted to the AIX Official list.

Moreover, Mr. Arman Argingazin has been member of the following companies in the last five years:

- 2011 – 2018: Member of the Board of Directors – Independent Nonexecutive Director, “Tau-Ken Samruk” National Mining Company” JSC;

- from 2021 to present time: Member of the Board of Directors – Independent Nonexecutive Director, “Kedentransservice” JSC;

- at present: Member of the Board of Directors – Independent Director, “Investment Bank of Kazakhstan” JSC

Full biography of new elected Board member of KazMunayGas will be available in the Company’s website www.kmg.kz

On approval of the new version of the Charter of NC “KazMunayGas” JSC

As a result of the meeting, the annual General Meeting of Shareholders of KazMunayGas approved the new version of the charter of NC “KazMunayGas” JSC and revoke the Charter of NC “KazMunayGas” JSC, approved by the resolution of the person owning all voting shares of KMG (the resolution of Samruk-Kazyna JSC’s Management Board of April 22, 2016, minutes No. 13/16) from the time of due registration of the restated Charter.

New version of the Charter of NC “KazMunayGas” JSC will be available in the Company’s website www.kmg.kz

For all questions of the annual General Meeting of Shareholders and the Company's activities, please refer to the contacts listed below and the Company's website www.kmg.kz. All necessary explanations and comments will be provided in due course.

For further information, please visit

https://www.kmg.kz/en

Contacts:

ir@kmg.kz

Tel: +7 (7172) 78 64 34

About JSC National Company KazMunayGas:

KMG’s main assets are as follows:

Midstream: KazTransOil – 90%, Kazakhstan China Pipeline (KCP) – 50%, Munai Tas – 51%, Batumi Oil Terminal – 100%, CPC – 20.75%, Kazmortransflot – 100%.

Axens to partner with KazMunayGas (KMG) in Polyethylene Project development in Kazakhstan

Wed, 07 Jun 2023 00:00:00 +0500

On June 6-7 2023 in Rueil-Malmaison (France) NC KazMunayGas JSC (KMG) held a meeting with Axens.

KMG and Axens intend to develop further cooperation within the implementation of the First Integrated Gas Chemical Complex (Project) with an annual design capacity of 1 250 thousand tons of polyethylene to be built on the territory of the special economic zone in Atyrau region of Kazakhstan.

In addition, KMG already has a positive experience of cooperation with Axens: in 2018, the Atyrau Oil Refinery successfully completed a large-scale modernization (with increase of oil refining conversion, increase of the production of petrochemical products, production of gasoline, diesel and jet fuels in compliance with the K4/K5 specifications), the licensor of which is Axens.

KMG considers to implement Axens’ AlphaButol^® technology at the Project. The AlphaButol^® process is the industry’s benchmark for the production of high purity 1-butene via ethylene dimerization, which is required for polyethylene production. Axens’ AlphaButol^® technology is widely used by other similar world-scale petrochemical plants allowing to produce premium grade polyethylene, demand for which continuously grows in the market.

In this regard, KMG and Axens have signed an agreement to supply the Process Design Package associated to the AlphaButol^® technology.

For reference:

Axens is a worldwide group headquartered in France that provides a complete range of solutions for the conversion of oil and biomass to cleaner fuels, the production and purification of major petrochemical intermediates, the chemical recycling of plastics, all natural gas treatment and conversion options along with hydrogen purification and transport, water treatment and carbon capture.

The offer includes technologies, equipment, furnaces, modular units, catalysts, adsorbents and related services. Axens is ideally positioned to cover the entire value chain, from feasibility study to unit start-up and follow-up throughout the entire unit cycle life. This unique position ensures the highest level of performance with a reduced environmental footprint. Axens global offer is based on highly trained human resources, modern production facilities and an extended global network for industrial, technical supports & commercial services. Axens is an IFP Group company.

JSC NC KazMunayGas announces financial results for the first quarter of 2023

Fri, 26 May 2023 00:00:00 +0500

Joint-stock National Company KazMunayGas (“KMG” or Company), Kazakhstan's national oil and gas company, published its interim condensed consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) 34 "Interim Financial Statements" for the three months ended on 31 March 2023, with a report on the results of the review of interim financial information by an independent auditor.

Key financial indicators for the first quarter of 2023^{^[1]} compared to the first quarter of 2022:

Revenue amounted to 1,887 bln tenge (USD 4,149 mln) compared to 2,182 bln tenge (USD 4,770 mln);
EBITDA amounted to 550 bln tenge (USD 1,210 mln) compared to 596 bln tenge (USD 1,304 mln);
The Company's net profit including share in income of jointventures and associates amounted to 288 bln tenge (USD 632 mln) compared to 332 bln tenge (USD 726 mln);
Net profit adjusted for the share in profits of joint ventures and associates^{^[2]}, amounted to 96 bln tenge (USD 211 mln) compared to 112 bln tenge (USD 245 mln);
FCF amounted to minus 53 bln tenge (USD minus116 mln), compared to 162 bln tenge (USD 355 mln);
Gross debt as of 31 March 2023 amounted to 4,229 bln tenge (USD 9,362 mln) compared to the amount of 4,143 bln tenge (USD 8,956 mln) as of 31 December 2022;
The Company's net debt as of 31 March 2023 amounted to 2,117 bln tenge (USD 4,688 mln) to the amount of 2,143 bln tenge (USD 4,632 mln) as of 31 December 2022.

	UoM	1Q 2023	1Q 2022	%
Dated Brent^{^[3]}, average	$/bbl	81.17	102.23	-20.6%
Dated Urals³, average	$/bbl	51.32	90.20	-43.1%
KEBCO³, average	$/bbl	77.96	-	-
Exchange rate, average	KZT/ USD	454.82	457.41	-0.6%
Revenue	bln tenge	1,887	2,182	-13.5%
Share in profit of JVs and associates, net	bln tenge	192	273	-29.7%
Dividends received from JVs and associates, net	bln tenge	0.25	52	-99.5%
Net profit	bln tenge	288	332	-13.4%
Net profit adjusted for shares in JVs and associates	bln tenge	96	112	-14.1%
EBITDA^{^[4]}	bln tenge	550	596	-7.7%
Adjusted EBITDA^{^[5]}	bln tenge	359	376	-4.6%
CAPEX (accrual basis)	bln tenge	151	74	+105.1%
CAPEX (cash basis)	bln tenge	189	91	+106.7%
FCF^{^[6]}	bln tenge	-53	162	- 132.4%
Gross debt^{^[7]}	bln tenge	4,229	4,143[8]	+2.1%
Net debt^{^[9]}	bln tenge	2,117	2,143⁸	-1.2%

Operating results for the first quarter of 2023^{^[10]} compared to the first quarter of 2022:

The volume of oil and gas condensate production increased by 8.7% and amounted to 5,961 thousand tonnes;
Oil transportation volumes amounted to 18,858 thousand tonnes compared to 18,309 thousand tonnes;
The volume of refining of hydrocarbons at Kazakhstani and Romanian refineries in aggregate increased by 8.1% and amounted to 4,936 thousand tonnes.

	1Q 2023 (net to KMG)	1Q 2022 (net to KMG)	%
Oil production, thous. tonnes	5,961	5,484	+8.7%
Gas production, mln m³	2,410	2,145	+12.3%
Oil transportation, thous. tonnes	18,858	18,309	+3.0%
Oil refining, thous. tonnes	4,936	4,566	+8.1%

Financial Highlights for the first quarter of 2023

Revenue

Revenue amounted to 1,887 bln tenge (USD 4,149 mln), which is 13.5% lower than in the first quarter of 2022.

Revenue dynamics were negatively impacted by a 20.6% year-on-year decrease in the average price of Brent crude oil.

Share in profit of joint ventures and associates

The share of profits of joint ventures and associates decreased by 29.7% and amounted to 192 bln tenge (USD 421 mln), mainly as a result of a decrease in profits of “Tengizchevroil” LLP by 71 bln tenge (USD 153 mln), “Mangistau Investments B.V.” by 24 bln tenge (USD 52 mln).

EBITDA

EBITDA for the first quarter of 2023 amounted to 550 bln tenge (USD 1,210 mln), a decrease of 7.7% compared to 596 bln tenge (USD 1,304 mln), mainly due to a decrease in the segment of oil and gas exploration and production by 28.6%. This reduction was due to a decrease in the average price of Brent crude oil by 20.6%.

Adjusted EBITDA

Adjusted EBITDA, reflecting dividends received from joint ventures and associates, instead of a share in the income of joint ventures and associates, amounted to 359 bln tenge (USD 789 mln), showing a decrease of 4.6%.

Net profit

The Company's net profit decreased in comparison with the first quarter of 2022 by 13.4% and amounted to 288 bln tenge (USD 632 mln).

Net profit adjusted for shares in JVs and associates

Net profit adjusted for shares in JVs and associates decreased by 14.1% from 112 bln tenge (USD 245 mln) to 96 bln tenge (USD 211 mln).

Cost of purchased oil, gas, oil products and other materials

The cost of purchased oil, gas, oil products and other materials in the reporting period decreased by 29.6% and amounted to 1,032 bln tenge (USD 2,268 mln). The decrease in cost was mainly due to a reduction in the cost of purchased oil for resale due to the decrease in the average oil price.

Operating expenses

Operating expenses increased by 38.9% and amounted to 260 bln tenge (USD 572 mln), mainly due to the increase in salary costs for employees in the regions where KMG operates as a whole and remuneration costs for short-term leases.

Transportation and distribution costs amounted to 61 bln tenge (USD 134 mln), up 33.6% compared to the first quarter of 2022.

General and administrative expenses remained at the level of the first quarter of 2022, amounting to 33 bln tenge (USD 73 mln).

Taxes other than income tax increased by 12.7% to 142 bln tenge (USD 312 mln) mainly due to an increase in the excise tax rate.

Finance costs amounted to 77 bln tenge (USD 168 mln), which is 10.0% less than the amount of the same period in 2022, due to the presence in the first quarter of 2022 of expenses of Atyrau Oil Refinery LLP for the commission for early repayment of the Eximbank loan in the amount of 259 bln tenge (USD 604 mln).

Capital expenditures

The Company's capital expenditures (accrual basis, disclosed in segment reporting) amounted to 151 bln tenge (USD 332 mln), an increase of 105.1% mainly due to the replacement of the section of the pipelines "Uzen-Atyrau-Samara", the reconstruction and expansion of the "Astrakhan-Mangyshlak" main water pipeline, as well as in connection with the costs of the “Kalamkas Sea, Khazar, Auezov” and Zhenis projects.

FCF

Free cash flow was minus 53 bln tenge (USD minus116 mln) compared to 162 bln tenge (USD 355 mln) in the first quarter of 2022. The negative value was associated with a decrease in oil prices, as well as an increase in capital expenditures.

Debt management

Debt indicators

	UoM	31 March, 2023	31 Dec., 2022	%
Bonds	bln tenge	3,253	3,282	-0.9%
Loans	bln tenge	976	862	+13.2%
Gross debt	bln tenge	4,229	4,143	+2.1%

Numbers may not add up due to a rounding.

Total debt as of 31 March 2023 was 4,229 bln tenge (USD 9,362 mln), an increase of 2.1% in tenge and by 4.5% in US dollar compared to 31 December 2022.

In the first quarter of 2023, the change in KMG loans related to the financing of working capital of KMG International N.V.: syndicated loan in the amount of USD 240 mln (109.3 bln tenge), a loan from BCP in the amount of USD 78 mln (35.5 bln tenge), a loan from Bank of Tokyo-Mitsubishi UFJ. Ltd in the amount of USD 53.6 mln (24.4 bln tenge).

In order to reduce the debt burden, in April 2023, KMG carried out a full early repayment of Eurobonds due in 2025 in the amount of USD 500 mln (to be disclosed in the semi-annual consolidated financial statements).

Net debt

Net debt as of 31 March 2023 was 2,117 bln tenge (USD 4,688 mln), which is 1.2% lower in tenge than as of 31 December 2022. Company's net debt, considering the remaining debt to Samruk-Kazyna JSC for the exercise of the call option to buyback Kashagan's share, amounted to 2,280 bln tenge (USD 5,048 mln).

Cash and cash equivalents

Consolidated cash and cash equivalents including deposits

	UoM	Mar.31, 2023	Dec.31, 2022	%
Cash and cash equivalents	bln tenge	971	763	+27.2%
Short-term deposits	bln tenge	1,081	1,178	-8.2%
Long-term deposits	bln tenge	59	59	0.0%
Cash and cash equivalents including deposits	bln tenge	2,111	2,000	+5.6%

Numbers may not add up due to a rounding.

Consolidated cash, cash equivalents, including cash in the form of deposits as of 31 March 2023 increased by 5.6% compared to the indicator as of 31 December 2022, and amounted to 2,111 bln tenge (USD 4,674 mln). In dollar terms, indicator increased by 8.1% from USD 4,323 mln as of 31 December 2022.

Key corporate events from the beginning of 2023:

On 9 March 2023, Standard&Poor's rating agency confirmed the Company's rating at BB+, revising the outlook from negative to stable, which reflects the agency's rating action in relation to Kazakhstan (the rating was confirmed at BBB-, the forecast was revised from negative to stable).
In 26 Apri 2023, KMG made a full early repayment of Eurobonds due in 2025 in the amount of USD 500 mln.
On 3 May 2023, the Standard&Poor's rating agency raised the probability of government support from "high" to "very high", the Company's rating remained unchanged.
Since the beginning of 2023, new appointments have been made in the structure of the Board of Directors and the Management Board of KMG. As of 26 May 2023, the Board of Directors of KMG consists of 8 people (Walton C.J. – Chairman of the Board of Directors, Mirzagaliyev M.M., Karabalin U.S., Zhanadil Ye.B., Holland P.M., Miller T.G., Zhubayev A.S., Berdigulov Ye.K.), the Management Board of KMG consists of 9 people (Mirzagaliyev M.M. – Chairman of the Management Board, Abdulgafarov D.Ye., Zakirov B.K., Lavrenov V.S., Makeyev D.S., Aryssova D.A., Brekeshev S.A., Kudaibergenov K.M., Khasanov D.K.).
In May 2023, the Board of Directors of KMG recommended that from the net income received by the end of 2022, an amount of 300 bln tenge be allocated for the payment of dividends to KMG shareholders. The amount of dividends for 2022 per common share will be 491.71 tenge. The decision to pay dividends is a subject to approval by shareholders at the Annual General Meeting of Shareholders (AGM), which will be held on 30 May 30 2023.

For further information, please visit

https://www.kmg.kz/en/investors/reporting/

Contacts:

ir@kmg.kz

Tel: +7 (7172) 78 64 34

About JSC National Company KazMunayGas:

KMG’s main assets are as follows:

Midstream: KazTransOil – 90%, Kazakhstan China Pipeline (KCP) – 50%, Munai Tas – 51%, Batumi Oil Terminal – 100%, CPC – 20.75%, Kazmortransflot – 100%.

^{^[1]} The amounts were converted to US dollars for user convenience at average exchange rates for respective periods (average USD/KZT for the first quarter of 2023 and 2022 were at 454.82 and 457.41 respectively; period-end USD/KZT as of 31 March 2023 and 31 December 2022 were at 451.71 and 462.65 respectively).

^{^[2]} Net profit adjusted for the share in profits of joint ventures and associates = Net profit plus dividends received from joint ventures and associated companies, minus the share in the profits of jointly controlled enterprises and associated companies.

^{^[3]} Source: S&P Global Platts.

^{^[4]} EBITDA = Revenue plus Share in profit of JVs and associates, net, minus Cost of purchased oil, gas petroleum products and refining costs minus Production expenses minus General and administrative expenses minus Transportation and Selling expenses minus Taxes other than income tax.

^{^[5]} Adjusted EBITDA = Revenue plus Dividends from JVs and associates, minus Cost of purchased oil, gas petroleum products and refining costs minus Production expenses minus General and administrative expenses minus Transportation and selling expenses minus Taxes other than income tax.

^{^[6]} Free Cash Flow = Net cash flow from operating activities minus Purchase of property, plant and equipment, intangible assets, investment property and exploration and evaluation assets. Dividends received from JVs and associates are included in cash flow from operating activities.

^{^[7]} Total debt at the end of the reporting period = bonds plus loans (short-term and long-term). Guarantees issued are not included in the calculation.

[8] Gross debt and Net debt are shown as of 31 December 2022.

^{^[9]} Net debt at the end of the reporting period: Bonds plus loans minus cash and cash equivalents minus bank deposits (short-term and longterm). Guarantees issued are not included in the calculation.

^{^[10]} Production figures are given in accordance with KMG's share of ownership in shares and associates and 100% of indicators for consolidated subsidiaries. More detailed information is available in the press release on the production results for the first quarter of 2023 at the link: www.kmg.kz

JSC NC KazMunayGas First Quarter of 2023 Trading Update

Fri, 19 May 2023 00:00:00 +0500

Joint-stock (JSC) National Company (NC) KazMunayGas (“KMG” or “Company”), Kazakhstan's national oil and gas company, announces its operating results for the first quarter of 2023.

Highlights for first quarter of 2023:

Oil and gas condensate production increased by 8.7% and amounted to 5,961 thous. tonnes;
Oil transportation volumes increased by 3.0% and amounted to 18,858 tonnes;
Hydrocarbons refining volumes at the Kazakh and Romanian refineries are increased by 8.1% and amounted to 4,936 thous. tonnes.

	1Q 2023 (net to KMG)	1Q 2022 (net to KMG)	%
Oil production, thous. tonnes	5,961	5,484	+8.7%
Gas production, mln m³	2,410	2,145	+12.3%
Oil transportation, thous. tonnes	18,858	18,309	+3.0%
Oil refining, thous. tonnes	4,936	4,566	+8.1%

Operating results are represented in accordance with KMG's ownership interest in joint ventures and associates and 100% of results for consolidated subsidiaries, unless otherwise stated.

Upstream

Oil and gas condensate production volume for the first quarter of 2023 amounted to 5,961 thous. tonnes (499 kbopd) representing an increase by 8.7%. Production volume of associated gas and natural raised by 12.3% to 2,410 mln m³.

Oil and condensate production, thous. tonnes	1Q 2023 (net to KMG)	1Q 2022 (net to KMG)	%
OMG	1,255	1,250	+0.4%
MMG	769	720	+6.8%
EMG	658	627	+4.8%
Tengiz	1,469	1,457	+0.8%
Kashagan	794	386	+105.5%
Karachaganak	281	285	-1.3%
Others	735	758	-3.0%
Total	5,961	5,484	+8.7%

Oil production at Tengiz increased by 0.8% amounting to 1,469 thous. tonnes (130 kbopd). Associated gas production increased by 0.1%, amounting to 811 mln m³.

A significant increase in production at Kashagan is associated with an increase in KMG's share in the project from 8.44% to 16.88% as a result of the completion of a deal to buy back a 50% stake in KMG Kashagan B.V. from Samruk-Kazyna JSC in September last year. Oil and gas production at Kashagan amounted to 794 thous. tonnes (70 kbopd) and 503 mln m³, respectively, showing an increase of 105.5% and 113.3%, respectively.

Oil and condensate production at Karachaganak decreased by 1.3% to 281 thous. tonnes (25 kbopd)due to restrictions on the acceptance of sour gas for processing by the Orenburg gas processing plant. Gas production increased by 2.7% and amounted to 565 mln m³.

The volume of oil and condensate production at operating assets increased by 1.8% to 3,417 thous. tonnes (275 kbopd) The increase in oil and condensate production is due to taken effective planned geological and technical measures at the Mangistaumunaigaz fields and an increase in production at Embamunaigaz. At the same time, the increase in oil production at operating assets was partially offset by a decrease in production at Kazgermunai due to a natural production decline at mature fields. Gas production decreased by 3.4% to 531 mln m³ mainly due to the gas factor at Kazakhturkmunai.

Midstream

The total volume of oil trunk pipelines and sea transportation increased by 3.0% to 18,858 thous. tonnes.

Oil transportation, thous. tonnes	1Q 2023 (100%)	1Q 2023 (net to KMG)	1Q 2022 (net to KMG)	%
KazTransOil	10,348	10,348	9,758	+6.1%
Kazakhstan-China Pipeline	4,644	2,322	2,351	-1.3%
MunaiTas²	1,387	707	657	+7.7%
Caspian Pipeline Consortium	16,322	3,387	3,274	+3.5%
Kazmortransflot	2,094	2,094	2,269	-7.7%
Total	-	18,858	18,309	+3.0%
1 Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation. 2 Munaitas is an equity-consolidated joint venture and transportation volumes are quoted at a 51% ownership interest.

The volume of oil transportation through trunk pipelines increased by 4.5% and amounted to 16,765 thous. tonnes. The growth mainly was due to an increase in the export volumes of Kashagan oil in the KazTransOil system in direction to Samara, as well as the transportation of oil in direction to the port of Aktau from the Dunga and Tengiz fields.

The total volume of maritime oil transportation decreased by 7.7% to 2,094 thous. tonnes, which was mainly due to decrease in oil volumes in the Mediterranean Sea where decrease in the export volumes of Kazakh shippers was due to the redirection of supplies by other routes.

As part of a five-year agreement on the transit of oil along the Aktau-Baku-Ceyhan route with an annual volume of 1.5 mln tonnes, concluded in 2022 between KMG and the Azerbaijani company SOCAR, in April of 2023 the first batch of oil in the amount of 90 thous. tonnes was shipped from the port of Ceyhan in the direction of the Romanian port of Constanta with unloading in the Petromidia refinery

Trading

Sales volumes of KMG's own produced oil and gas condensate increased by 13.3% and amounted to 5,936 thous. tonnes, of which 65.9% was exported.

Supplies of own produced oil and gas condensate volumes to cover the needs of the domestic market amounted to 2,027 thous. tonnes, including deliveries of crude oil from operating assets (Ozenmunaigas, Embamunaigas, Kazakhturkmunai and Urikhtau Operating) in the amount of 1,294 thous. tonnes to Atyrau, Shymkent and Pavlodar refineries for further oil refining and sales of oil products.

Downstream

Hydrocarbon refining, thous. tonnes	1Q 2023 (net to KMG)	1Q 2022 (net to KMG)	%
Atyrau refinery	1,410	1,315	+7.2%
Pavlodar refinery	1,466	1,400	+4.7%
Shymkent refinery¹	644	731	-12.0%
Caspi Bitum	63	71	-11.3%
Petromidia	1,279	980	+30.5%
Vega	76	69	+9.9%
Total	4,936	4,566	+8.1%
[1] Shymkent refinery and Caspi Bitum refining volumes are indicated at a share of 50%

The total volume of hydrocarbon processing increased by 8.1% compared to the same period in 2022 and amounted to 4,936 thous. tonnes:

At Kazakhstani refineries, the volume of hydrocarbon refining increased by 1.8% and amounted to 3,581 thous. tonnes. The increase in refining volumes was due to the growth in demand for oil products in the domestic market. The decrease in refining volumes at Shymkent refinery due to its planned overhaul in March was offset by an increase in refining volumes at the Atyrau Refinery and Pavlodar Refinery;
The refining volume at the KMG International refineries (Petromidia, Vega) in Romania increased by 29.2% and amounted to 1,355 thous. tonnes. The increase in refining volumes was due to a long shutdown of the Petromidia plant for scheduled overhaul last year and an increase in demand for oil products in the reporting period.

The volume of production of oil products at Kazakh and Romanian refineries increased by 9.8% and amounted to 4,585 thous. tonnes:

Kazakhstani refineries produced 3,267 thous. tonnes of oil products, which is 3.7% more than in the same period in 2022, mainly due to the volumes of Atyrau refinery, at the same time, the production of oil products at Shymkent refinery was lower due to its scheduled overhaul in March 2023;
Refineries of KMG International (Petromidia, Vega) produced 1,318 thous. tonnes of oil products, which is 28.8% higher than in the same period of last year. The increase in indicators was due to a corresponding increase in refining volumes at the Petromidia refinery.

For further information, please visit https://www.kmg.kz/en/investors/reporting/

Contacts:

Email: ir@kmg.kz

Tel: +7 7172 78 64 34

About JSC National Company KazMunayGas:

KMG’s main assets are as follows:

Upstream: Ozenmunaigas (OMG) – 100%, Embamunaigas (EMG) – 100%, KazakhTurkmunai (KTM) – 100%, KazMunayTeniz – 100%, Urikhtau (UO) – 100%, Mangistaumunaigaz (MMG) – 50%, Kazgermunai (KGM) – 50%, Karazhanbasmunai (KBM) – 50%, KazakhOil Aktobe (KOA) – 50%, PetroKazakhstan Inc (PKI) – 33%, Tengizchevroil (Tengiz) – 20%, Karachaganak – 10%, Kashagan – 16.88%.

Midstream: KazTransOil – 90%, Kazakhstan China Pipeline (KCP) – 50%, Munai Tas – 51%, Batumi Oil Terminal – 100%, Caspian Pipeline Consortium (CPC) – 20.75%, Kazmortransflot – 100%.

Downstream: Pavlodar refinery – 100%, Atyrau refinery – 99,53%, Shymkent refinery – 49,72%,
KMG International – 100%, Petromidia – 54,63%, Vega – 54,63%, KazRosGas – 50%, Kazakhstan

Petrochemical Industries Inc – 49.5%.

“KazMunayGas” agrees on conducting geological studies with Sinopec

Thu, 18 May 2023 00:00:00 +0500

On 18 May 2023, as part of the state visit of President of the Republic of Kazakhstan Kassym-Jomart Tokayev to China, JSC NC “KazMunayGas” and Sinopec International Energy Investment Limited (Sinopec) signed an Agreement on Cooperation in Geological Study of the Subsurface of the Republic of Kazakhstan.

The document contemplates a joint study of 17 exploration areas located within the main and underexplored sedimentary basins. Upon confirmation of the area(s) prospects, the parties will consider the possibility of receiving a hydrocarbons exploration and production contract.

Also, SINOPEC will organize the process of exchange of experience in the area of field exploration and development.

“The signed Agreement in the field of geological study of subsurface will enable us to identify the most promising “points of growth” and in the future proceed directly to the industrial development of new deposits in Kazakhstan,” — noted Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”.

“KazMunayGas” and Sinopec sign Polyethylene Project Principles Agreement

Thu, 18 May 2023 00:00:00 +0500

On 18 May 2023, as part of the state visit of President of the Republic of Kazakhstan Kassym-Jomart Tokayev to China, JSC NC “KazMunayGas” (KMG) and China Petroleum & Chemical Corporation (Sinopec) signed a Principles Agreement for the joint implementation of the Polyethylene Project in Atyrau region.

The document contemplates the entry of Sinopec into the project as an equal partner on a par with SIBUR.

As part of the entry of Sinopec in the future, the parties will sign a share purchase agreement and other binding documents.

The final investment decision (FID) by the Project members is expected in 2024.

“I am sure that Sinopec’s successful experience in engineering, construction and operation of such complex process petrochemical facilities will have a positive impact on our Project, as well as strengthen the investment appeals of the petrochemical industry in Kazakhstan,” — noted Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”.

The entry of Sinopec as an equal partner will make it possible to use the company’s technologies and expertise in the field of construction of petrochemical facilities, as well as organize the sale of finished products in China in the future.

Background information:

JSC NC “KazMunayGas” is implementing the petrochemical project of Construction of a Polyethylene Plant with a Capacity of 1.25 Million Tonnes Annually (Polyethylene Project). The plant will be built within a free economic zone in Karabatan in close proximity to the Tengiz field (Atyrau region).

To date, licensing agreements have been concluded for the use of MarTECH® ADL and UNIPOL™ PE Process technologies with the American companies Chevron Phillips Chemical and Univation Technologies. This will enable production of an extensive product line, including premium types of polyethylene, which are in high demand all over the world.

In April 2023, SIBUR officially completed its entry into the project. Earlier in 2021-2022, KMG and SIBUR signed binding documents on the entry of a Russian partner into the project.

In May 2023, the partners started developing the basic design (EBD/FEED).

“KazMunayGas” and CNPC sign Agreement on Expanding Strategic Cooperation

Thu, 18 May 2023 00:00:00 +0500

On 18 May 2023, in Xi’an, as part of the visit of President of the Republic of Kazakhstan Kassym-Jomart Tokayev to China, JSC NC “KazMunayGas” and China National Petroleum Corporation (CNPC) signed an Agreement on Expanding Strategic Cooperation in the oil and gas industry.

Under the Agreement, it is planned to enhance cooperation in geologic exploration and oil refining, explore opportunities to increase the volume of transportation through the Kazakhstan-China oil pipeline, as well as develop human resources of the companies.

“KazMunayGas and CNPC have developed strong relationship of trust over many years of joint work, oil and gas projects that are important for Kazakhstan are being jointly implemented. The Agreement signed today is the next stage in strengthening the partnership between the companies,” said Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”.

NC KazMunayGas JSC published Annual Report for 2022

Thu, 27 Apr 2023 00:00:00 +0500

The Annual Report is available at the following link: www.kmg.kz

On the rules and principles of KMG’s procurement and tenders

Tue, 25 Apr 2023 00:00:00 +0500

Procurement of goods, works and services by KMG and its subsidiary and affiliate entities (SAEs) is governed by the Procedure for Procurement of Samruk-Kazyna JSC (the Fund), adopted as provided in RoK's Law No. 47-VII “On Procurement of Individual Quasi-public Entities”.

Procurement is based on the principles of value for money, openness and transparency of the procurement process, fair competition, and prevention of corruption. In the selection of contractual partners, the company is guided by the following combination of factors: the best price, quality and conditions, business reputation of the contractual partner. Contractors are required to comply with the law, treat employees fairly, ensure safe working conditions, and protect the environment. These conditions are included by default in the terms of contracts concluded by KMG with its contractual partners.

SAEs carry out procurement independently in a decentralized mode through the "Electronic Procurement Information System" (EPIS). Free access to information on procurement is provided to all interested parties; Samruk-Kazyna Contract LLP being the operator of the system. EPIS has automated and standardized procurement cycle procedures, made the process transparent, and minimized the impact of the human factor. At the same time, EPIS has an effective internal control system, including appeals against the results of procurement.

Indicatively, potential suppliers sent 1,597 appeals to the Fund (the authorized body for procurement control), related to contesting the procurement procedures of KMG’s entities, of which 1,509 appeals were not confirmed (95%). It should be noted that during the consideration of a complaint, the procurement procedures of the customers are blocked and, if a violation is confirmed, the results of the procurement are canceled and reviewed. Such an algorithm guarantees the conclusion of all contracts of KMG’s entities in full compliance with the Fund's Procurement Procedure. Responsible persons (up to the top managers) are subject to disciplinary liability for the committed violations. At the same time, it should be noted that among all the portfolio companies of the Fund, KMG has the smallest share of violations, for which the arguments are confirmed, which indicates the high quality of the procurement process.

The approaches being applied are based on the Public Procurement Model Law (2011), developed and recommended by UNCITRAL (United Nations Commission on International Trade Law). These principles implemented in the KMG system ensure transparency of procurement through e-procurement, equal opportunities for all, including the possibility of contesting the results of tenders, favorable treatment for the domestic small and medium-sized businesses. Accordingly, at the system level, transparency and efficiency are maintained based on the best international standards and practices.

As for the statistics, then the total volume of 2022 procurement for the KMG group amounted to over 1 trillion tenges (excluding long-term contracts).

One of the important aspects of KMG's procurement activities is the reduction in the single-source procurement and increase in the share of competitive purchases. Over the past three years, the share of competitive procurement has increased and amounted to 49% in 2022 (compared to 42% in 2021), which indicates KMG's commitment to ensuring fair competition and sustainable development goals.

Improving procurement activities is one of the top priorities for KMG. Another tool to achieve this is the implementation of a mechanism for conducting a pre-qualification (PQ) of potential suppliers, carried out through questionnaires and audits. Transparency, equal competition and free selection have become the main PQ principles. The PQ Commission of the Fund further approved 24 categories of goods, works and services for procurement by KMG's subsidiaries and affiliates through an open tender – among the potential suppliers that have passed the PQ procedure. Category management (CM) is a process of developing an integrated approach to cost reduction.

The above aspects of the procurement standards, rules, practices and technology make it possible, in accordance with the international experience, to transparently and efficiently conduct tenders in the KMG group, based on maximizing benefits in the long term.

JSC NC “KazMunayGas” announces about sending Early redemption notice №2 to the holders of Notes due 2025

Mon, 24 Apr 2023 00:00:00 +0500

JSC NC “KazMunayGas” (the “Issuer”)

U.S.$500,000,000 4.75% Notes due 2025 (the “Notes”)

(Regulation S ISIN: XS1807299174; Common Code: 180729917;

Rule 144A ISIN: US48667QAR65; Common Code: 180730443; CUSIP: 48667QAR6)

April 24, 2023

EARLY REDEMPTION NOTICE №2

ACCRUED AMOUNT AND MAKE WHOLE PREMIUM

Capitalised terms not otherwise defined in this notice will have the meanings given to them in the Terms and Conditions of the Notes or the early redemption notice (the "Early Redemption Notice") dated April 11, 2023, given by the Issuer to Noteholders.

Reference is made to the Early Redemption Notice where the Issuer gave notice that, pursuant to Condition 10(f) (Make Whole Redemption at the Option of the Issuer) (originally Condition 12(f) on issuance in 2018) of the Terms and Conditions of the Notes, it will exercise its option to redeem all of the outstanding Notes on April 26, 2023 (the "Call Settlement Date").

In accordance with Condition 10(f) (Make Whole Redemption at the Option of the Issuer) (originally Condition 12(f) on issuance in 2018) of the Terms and Conditions of the Notes, the Issuer will redeem the Notes in whole on the Call Settlement Date at the following price:

(a) the aggregate principal amount of the outstanding Notes plus;

(b) interest and other amounts that may be due pursuant to the Conditions (if any) accrued but unpaid to, excluding, the Call Settlement Date (the "Accrued Amount"); plus

The amount of the Accrued Amount will be U.S.$0.26 per U.S.$1,000 in principal amount of the Notes and the Make Whole Premium will be U.S.$1.59 per U.S.$1,000 in principal amount of the Notes.

All the outstanding Notes will be redeemed on the Call Settlement Date of April 26, 2023.

JSC NC "KazMunayGas" subsequently announces a change in the notice date and call settlement date for USD 500,000,000 Eurobonds with an interest rate of 4.75% and maturity in 2025 (XS1807299174, US48667QAR65)

Tue, 11 Apr 2023 00:00:00 +0500

JSC NC “KazMunayGas” (the “Issuer”)

U.S.$500,000,000 4.75% Notes due 2025 (the “Notes”)

(Regulation S ISIN: XS1807299174; Common Code: 180729917;

Rule 144A ISIN: US48667QAR65; Common Code: 180730443; CUSIP: 48667QAR6)

April 11, 2023

EARLY REDEMPTION NOTICE №1

Capitalised terms not otherwise defined in this notice will have the meanings given to them in the Terms and Conditions of the Notes.

The Issuer hereby gives notice to the holders of the Notes that, pursuant to Condition 12(f) (Make Whole Redemption at the Option of the Issuer) of the Terms and Conditions of the Notes, it is exercising its option to redeem all of the outstanding Notes on 26 April 2023 (the “Call Settlement Date”).

In accordance with Condition 12(f) (Make Whole Redemption at the Option of the Issuer) of the Terms and Conditions of the Notes, the Issuer will redeem the Notes in whole on the Call Settlement Date at the following price:

(a) the aggregate principal amount of the outstanding Notes plus;

(b) interest and other amounts that may be due pursuant to these Conditions (if any) accrued but unpaid to, excluding, the Call Settlement Date (the “Accrued Amount”); plus

The amount of the Accrued Amount and the Make Whole Premium will be separately communicated to Noteholders by the Issuer not less than two Business Days prior to the Call Settlement Date.

This notice is given by the Issuer.

Yours faithfully,

_________________

Deputy Chairman of the Management Board

Diana Aryssova

JSC NC “KazMunayGas” announces about sending Early redemption notice №1 to the holders of Notes due 2025

Mon, 10 Apr 2023 00:00:00 +0500

JSC NC “KazMunayGas” announces about sending Early redemption notice №1 of Notes due 2025, U.S.$500,000,000 (coupon 4.75%) (hereinafter – Notes) (Regulation S ISIN: XS1807299174; Common Code: 180729917; Rule 144A ISIN: US48667QAR65; Common Code: 180730443; CUSIP: 48667QAR6).

JSC NC “KazMunayGas” (hereinafter – KMG) hereby gives notice to the holders of the Notes that, pursuant to Condition 12(f) (Make Whole Redemption at the Option of the Issuer) of the Terms and Conditions of the Notes, KMG is exercising its option to redeem all of the outstanding Notes on 24 April 2023 (the “Call Settlement Date”).

In accordance with Condition 12(f) (Make Whole Redemption at the Option of the Issuer) of the Terms and Conditions of the Notes, KMG will redeem the Notes in whole on the Call Settlement Date at the following price:

(a) the aggregate principal amount of the outstanding Notes plus;

(b) interest and other amounts that may be due pursuant to these Conditions (if any) accrued but unpaid to, excluding, the Call Settlement Date (the “Accrued Amount”); plus

The amount of the Accrued Amount and the Make Whole Premium will be separately communicated to Noteholders not less than two Business Days prior to the Call Settlement Date.

JSC NC “KazMunayGas” reports on changes in the management

Wed, 05 Apr 2023 00:00:00 +0500

JSC NC “KazMunayGas” reports on the following changes in the Company’s management

Deputy Chairman of the Management Board

Diana Aidarovna Aryssova has been appointed Deputy Chairperson of the Management Board of JSC NC "KazMunayGas”. She will supervise the Economy and Finance area.

From 2016 to 2023, D. Aryssova held the position of the Director of the Oil and Gas Operation Account Examination Department in PSA LLP.

Over a number of year, she worked as Chief Financial Officer, Deputy General Director for Economy and Finance in KMG Drilling&Services LLP; acting Deputy General Director for Economy and Finance, Director of the Corporate Finance Department of OOC KazMunayTeniz JSC; Energy Project Coordinator at the British Embassy in Kazakhstan.

JSC NC “KazMunayGas” reports on changes in the management

Mon, 20 Mar 2023 00:00:00 +0500

JSC NC “KazMunayGas” reports on changes in the Company’s management

Dauren Karabayev, Deputy Chairman of the Management Board,left his post on 20 March 2023 due to a transfer to a position in Chevron group.

M. Mirzagaliyev, Chairman of the Management Board of JSC NC KazMunayGas”, thanked D. Karabayev for the many years of dedicated work and contribution to the company’s development.

Over the years, Dauren Saparaliyevich Karabayev worked in various executive positions in KMG. As the manager of the Economy and Finance team, he made major efforts to ensure the company’s financial soundness.

JSC NC KazMunayGas announces 2022 FY financial results

Wed, 15 Mar 2023 00:00:00 +0500

Joint-stock (JSC) National Company (NC) KazMunayGas («KMG» or Company), Kazakhstan's national vertically integrated oil and gas company, published its consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) for 2022 with an independent auditor's report.

Key financial indicators for 2022^{^[1]} compared to 2021 (include 100% stake in KMG Kashagan B.V. by full consolidation method):

Revenue increased by 34.5% to 8,686 bn tenge (USD 18,845 mn), compared to 6,459 bn tenge (USD 15,161 mn);
EBITDA increased by 25.9% to 2,538 bn tenge (USD 5,505 mn), compared to 2,015 bn tenge (USD 4,730 mn);
The Company’s net profit including share in income of joint ventures and associates increased by 2.4% and amounted to 1,317 bn tenge (USD 2,858 mn);
Net profit adjusted for share in profits of joint ventures and associates[2] was 788 bn tenge (USD 1,710 mn), compared to 1,022 bn tenge (USD 2,398 mn);
FCF excluding share buyback in KMG Kashagan B.V. amounted to 1,116 bn tenge (USD 2 421 mn), compared to 756 bn tenge (USD 1,774 mn) year-on-year;
FCF calculated in accordance with updated dividend policy, including share buyback in KMG Kashagan B.V. amounted to minus 82 bn tenge compared to 756 bn tenge in 2021;
Gross debt amounted to 4,143 bln tenge (USD 8,956 mln) as of 31 December 2022, compared to 3,746 bln tenge (USD 8,676 mln) as of 31 December 2021;
The Company's 2022 year-end balance of net debt was at 2,143 bln tenge (USD 4,632 mln), compared to 2021 year-end balance of 1,984 bln tenge (USD 4,594 mln).

	UoM	2022	2021	%
Dated Brent[3], average	$/bbl	101.32	70.91	+42.9%
Dated Urals³, average	$/bbl	76.87	69.23	+11.0%
KEBCO³	$/bbl	77.2	-	-
Exchange rate, average	KZT/USD	460.93	426.06	+8.2%
Revenue	bln tenge	8,686	6,459	+34.5%
Share in profit of JVs and associates, net	bln tenge	991	680	+45.7%
Dividends received from JVs and associate	bln tenge	462	415	+11.3%
Net profit	bln tenge	1,317	1,287	+2.4%
Net profit adjusted for the share in profit of JVs and associates	bln tenge	788	1,022	-22.8%
EBITDA[4]	bln tenge	2,538	2,015	+25.9%
Adjusted EBITDA[5]	bln tenge	2,009	1,750	+14.8%
CAPEX (accrual basis)	bln tenge	535	472	+13.4%
CAPEX (cash basis)	bln tenge	451	454	-0.5%
FCF [6]	bln tenge	1,116	756	47.7%
FCF (on dividend policy)[7]	bln tenge	-82	756	-110.9%
Gross debt [8]	bln tenge	4,143	3,746	+10.6%
Net debt [9]	bln tenge	2,143	1,984	+8.0%

Impact of Kashagan call option exercise on financial performance

On September 15, 2022 the Company increased its stake in KMG Kashagan B.V. from 50% to 100%. KMG Kashagan B.V. owns 16.88% in the Kashagan project.

Previously, 50% interest in KMG Kashagan B.V. in the consolidated financial statements of KMG was reflected by equity method as investment in joint ventures, which implied inclusion of only 50% interest in net assets of KMG Kashagan B.V. in consolidated assets of KMG and 50% interest in net income of KMG Kashagan B.V. in the consolidated income statement of KMG.

Since the ownership of 100% interest in KMG Kashagan B.V., this company is consolidated by the method of full consolidation in the financial statements of KMG in the current period and as of the current date. In accordance with IFRS standards, KMG's historical results have been restated to include the 100% share of KMG Kashagan B.V. Accordingly, the financial performance of KMG in the previously published reports differs from the results in the nine months of 2022. More detailed information is available in the consolidated financial statements of KMG.

Operating results for 2022[10]:

Oil and gas condensate production increased by 1.7% to 22,012 thousand tonnes;
Oil transportation volumes amounted to 74,658 thousand tonnes compared to 74,565 thousand tonnes in 2021;
The volume of refining of hydrocarbons at Kazakhstani and Romanian refineries in aggregate increased by 5.7% and amounted to 19,900 thousand tonnes.

	2022 (net to KMG)	2021 (net to KMG)	%
Oil production, thous. tonnes	22,012[11]	21,651	+1.7%
Gas production, mn m³	8,241¹²	8,081	+2.0%
Oil transportation, thous. tons	74,658	74,565	+0.1%
Oil refining, thous. tonnes	19,900	18,833	+5.7%

Review of financial results for 2022[12] (includes 100% interest in KMG Kashagan B.V. by full consolidation method)

Revenue

Revenue amounted to 8,686 bn tenge (USD 18,845 mn), an increase of 34.5% higher than in 2021.

The revenue dynamics were positively affected by a 42.9% year-on-year increase in the average Brent crude oil price and weakening of the average exchange rate of the tenge against the US dollar by 8.2%.

Share in profits of joint ventures and associates

The share in income of joint ventures and associates increased by 45.7% to 991 bn tenge (USD 2,151 mn), mainly due to an increase in profits of “Tengizchevroil” LLP by 301 bn tenge (USD 575 mn).

EBITDA

EBITDA was 2,538 bn tenge (USD 5,505 mn), up 25.9% compared to 2,015 bn tenge (USD 4,730 mn) in 2021, driven by a 27.2% growth in Oil & Gas Exploration and Production of oil and gas and a 58.3% growth in Refining and trading of crude oil and refined products segments. This growth was achieved due to increase of international prices for crude oil and petroleum products.

Adjusted EBITDA

Adjusted EBITDA, which represents dividends received from joint ventures and associates instead of share in profits of joint ventures and associates, was 2,009 bn tenge (USD 4,358 mn), showing a 14.8% growth.

Net profit

The Company's net profit increased by 2.4% to 1,317 bn tenge (USD 2 858 mn).

Net profit adjusted for the share in profit of JVs and associates

The Company's net profit adjusted for the share in profit of JVs and associates decreased by 22.8% from 1,022 bn tenge (USD 2,398 mn) to 788 bn tenge (USD 1,710 mn).

Cost of purchased oil, gas, oil products and other materials

The cost of purchased oil, gas, oil products and other materials in the reporting period increased by 37.3%, reaching 4,954 bn tenge (USD 10,749 mn). The increase in cost of sales was largely due to an increase in crude oil and oil products prices.

Operating expenses

Production costs increased by 58.4% to 1,142 bn tenge (USD 2,478 mn), including due to growth of wage costs workers in the regions of operations as a whole KMG.

Transportation and selling expenses were 205 bn tenge (USD 445 mn), up 11.9% YoY.

General and administrative expenses increased by 5.8% to 160 bn tenge (USD 347 mn) due to an increase in salaries for employees in the regions where the Company operates.

Taxes other than income tax increased by 47.0% to 678 bn tenge (USD 1,471 mn) mainly as a result of an increase in rent tax due to higher oil prices and excise tax expenses.

Finance costs amounted to 307 bn tenge (USD 666 mn), an increase of 16.8% mainly due to increase in interest expense on borrowings and bonds due to weakening of tenge and some increase in interest rates.

Capital expenditure

The Company's capital expenditure (on an accrual basis, as disclosed in the segment reporting) was 535 bn tenge (USD 1,161 mn), up 13.4% primarily in the oil and gas exploration and production segment.

Free cash flow

Free cash flow excluding share buyback in KMG Kashagan B.V. amounted to 1,116 bn tenge (USD 2 421 mn), compared to 756 bn tenge (USD 1,774 mn) year-on-year. At the same time free cash flow recalculated under the new dividend policy, including share buyback in KMG Kashagan B.V. amounted to minus 82 bn tenge down 110,9% YoY. The negative value of the indicator is due to the costs incurred for the acquisition of a stake in Kashagan.

Debt management

Debt management

Debt management	Unit	31 December 202	31 December 20	%
Bonds	bn tenge	3,282	2,706	+21.3%
Loans	bn tenge	862	1,040	-17.2%
Total debt	bn tenge	4,143	3,746	+10.6%

Numbers may not add up due to rounding.

Total debt as of 31 December 2022 was 4,143 bn tenge (USD 8,956 mn), an increase of 10.6% in tenge terms and 3.2% in US dollar terms compared to 31 December 2021.

In September 2022, the Company placed bonds in the amount of 752 bn tenge with a coupon rate of 3.0% per annum and maturing in 2035. These bonds were fully purchased by Samruk-Kazyna JSC as part of the acquisition of shares of KMG Kashagan B.V. The difference between fair value and face value of the bond in the amount of 380 bn tenge is reflected as transactions with Samruk-Kazyna JSC in the consolidated statement of changes in equity.

In January 2022, Atyrau refinery (ANPZ) made full early repayment of a loan from Eximbank in the amount of USD 604 million (259 billion tenge), including interest. The funds reserved in November 2021 were used for repayment.

As of 31 December 2022, amounts owed to Samruk-Kazyna JSC are mainly represented by amounts owed for exercise of the Option in the amount of 165 bn tenge. This amount in the Company's consolidated financial statements for the period is included in other current financial liabilities. At the same time the total debt of the Company, including this debt to Samruk-Kazyna JSC for execution of the Call Option to buy back Kashagan shares, amounted to 4,308 bn tenge (USD 9,312 mn).

Net debt

Net debt as of 31 December 2022 was 2,143 bn tenge (USD 4,632 mn), which is 8.0% higher in tenge terms than as of 31 December 2021. At the same time the Company's net debt including the debt to Samruk-Kazyna for exercise of the Kashagan shares Buy-Back Option was 2,308 bn tenge (USD 4,989 mn).

Cash and cash equivalents

Consolidated cash and cash equivalents including deposits

Name of the indicator	Unit	31 December 2022	31 December 2021	%
Cash and cash equivalents	bn tenge	763	1,144	-33.3%
Short-term deposits	bn tenge	1,178	562	+109.5%
Long-term deposits	bn tenge	59	56	+5.7%
Cash and cash equivalents including deposits	bn tenge	2,000	1,763	+13.5%

The numbers may not add up due to rounding.

Consolidated cash, cash equivalents, including cash in the form of deposits as of 31 December 2022 increased by 13.5% compared to the indicator as of 31 December 2021, and amounted to 2,000 bn tenge (USD 4,323 mn). In US dollar terms, it also increased by 5.9% to USD 4,323 mn compared to USD 4,082 mn as of 31 December 2021.

Key corporate events since the beginning of 2022:

On 21 January 2022, Atyrau Refinery made full early repayment of the loan from Eximbank in the amount of USD 604 mn (259 bln tenge), including interest.
Since 15 April 2022, Mirzagaliev M.M. has been appointed as the Chairman of the Management Board of KMG.
On 13 June 2022, the Company completed the acquisition of a 49.5% stake in Kazakhstan Petrochemical Industries Inc. LLP, which is implementing a large-scale project for the construction of a polypropylene plant.
On 20 June 2022, the Company, in accordance with the decision of Samruk-Kazyna JSC and the National Bank of the Republic of Kazakhstan, completed the payment of dividends on KMG shares for 2021 in the amount of 327.80 tenge per share for a total amount of 200 bln tenge.
On 23 June 2022, KMG opened its representative office in Aktau in order to strengthen work in the region of presence on issues of interaction with local executive bodies, trade unions of KMG subsidiaries and contractors, implementation of projects to ensure employment of the population, control over the execution of production programs, as well as fields development.
In July 2022, the Company acquired a 49% stake in Petrosun LLP, the main activity of which is the sale of liquefied petroleum gas and petroleum products.
On 12 September 2022 the Company placed 752 bn tenge bonds with 3.0% coupon rate and maturity in 2035 to finance execution of a call option to buy back KMG Kashagan B.V.'s shares from Samruk-Kazyna JSC.
On 15 September 2022, the Company exercised its right under a call option agreement entered into in 2015 and acquired from Samruk-Kazyna JSC a 50% interest in NC KMG Kashagan B.V. for USD 3.8 bn. The Company is the owner of 16.88% in the Production Sharing Agreement for the North Caspian Project (the Kashagan project).
27 September 2022 Standard & Poor's Ratings Services upgraded the Company's rating to BB+, Outlook Negative, following the call option exercise to buy back KMG Kashagan B.V.'s shares from Samruk-Kazyna JSC.
On 27 October 2022 the Company approved a new dividend policy in respect of its shareholders which sets out a new dividend policy and corresponding procedure for dividend payments.
In November 2022 hydrocarbon production at Kashagan is fully resumed after the shutdown of the Bolashak integrated oil and gas treatment facility on 3 August 2022, due to the detection of signs of gas leakage at the production site.
On 8 November 2022 the President gave the start of a large-scale integrated gas chemical complex LLP Kazakhstan Petrochemical Industries Inc. designed to produce up to 500 thousand tonnes of polypropylene per year.
On 8 December 2022 KMG shares started trading at the AIX and KASE stock exchanges. KMG's IPO is not only the largest IPO in the history of the Kazakhstan stock market in terms of the number of applications received (129.9 thousand), the placement volume (153.9 billion tenge) and the participation of individuals in the placement volume (52.1%), but also and the first "digital" IPO (99% of applications are submitted online).
On 9 March 2023 Standard & Poor's Ratings Services affirmed the Company’s ratings on ‘BB+’ and revised its outlook to stable from negative. The outlook revision mirrors agency’s rating action on Kazakhstan ('BBB' ratings affirmed, outlook revised to stable from negative).

More detailed information is available at: https://www.kmg.kz/en/investors/reporting/

^{^[1]} The amounts were converted to US dollars for user convenience at average exchange rates for respective periods (average USDKZT for 2022 and 2021 were at 460.93 и 426.06 respectively; year-end USDKZT as of 31 December 2022 and 31 December 2021 were at 462.65 и 431.80 respectively).

[2] Net income adjusted for share of profits of joint ventures and associates = Net income plus dividends received from joint ventures and associates minus share of income of joint ventures and associates

[3] Source: S&P Global Platts.

[4] EBITDA = Revenue plus Share in profit of JVs and associates, net, minus Cost of purchased oil, gas petroleum products and refining costs minus Production expenses minus General and administrative expenses minus Transportation and selling expenses minus Taxes other than income tax.

[5] Adjusted EBITDA = Revenue plus Dividends JVs and associates, minus Cost of purchased oil, gas petroleum products and refining costs minus Production expenses minus General and administrative expenses minus Transportation and selling expenses minus Taxes other than income tax.

[6] Free Cash Flow = Net cash flow from operating activities minus Purchase of property, plant and equipment, intangible assets, investment property and exploration and evaluation assets. Dividends received from JVs and associates are included in cash flow from operating activities.

[7] Free Cash Flow (according to the dividend policy) = consolidated cash flow of the Company from operating activities (including dividends received from joint ventures and associates, but not including net change in working capital in terms of advances received for oil supply) minus acquisition of fixed assets (including advances for fixed assets) minus acquisition of intangible assets minus acquisition of field development assets minus acquisition of appraisal and exploration assets minus acquisition of a share in a subsidiary/joint venture plus funds received from the sale of participatory interests in a subsidiary/joint/associated company (excluding funds received from the transfer of the Company's assets into a competitive environment according to the lists, approved by Resolutions No. 1141 of the Government of the Republic of Kazakhstan dated December 30, 2015 and No. 908 of December 29, 2020) based on the results of the reporting period.

[8] Total debt at the end of the reporting period = bonds plus loans (short-term and long-term). Guarantees issued are not included in the calculation.

[9] Net debt at the end of the reporting period: Bonds plus loans minus cash and cash equivalents minus bank deposits (short-term and long term). Guarantees issued are not included in the calculation.

[10] Production results are stated in accordance with KMG's shareholdings in joint ventures and associates and 100% for consolidated subsidiaries. More detailed information is available in the press release on production results for 2022: https://www.kmg.kz/upload/iblock/95e/bj9hihmjknzd4o1nb72de2ly383jgfrv/4Q%2022%20Operating%20press-release%20ENG.pdf

[11] KMG Kashagan B.V.'s oil and gas production volumes are included at 50% until 15 September 2022 and 100% after 15 September 2022.

[12] On 9 November 2021 the Company transferred 100% of shares of NC QazaqGaz JSC (hereinafter – KazTransGas, KTG) to Samruk-Kazyna for KZT 1 and the trust management agreement was terminated. As from 8 November 2021, KTG was classified as a discontinued operation. For further details, see Note 5 to the 2022 Consolidated Financial Statements.

Invitation to FY 2022 Financial and Operational Results Update Call

Tue, 07 Mar 2023 00:00:00 +0500

JSC NC KazMunayGas (“the Company”) invites you to participate in a conference call on operating and financial results for 2022, which will be held on 15 March 2023 at 05:00 pm Astana time / 11:00 am GMT / 07:00 am EDT.

The results for the reporting period will be presented by the Company's management.

Please complete the registration form using the link to participate in the call:

https://us06web.zoom.us/webinar/register/WN_5uiZVASUT4uXKFepmjQqXQ

Dial-in details will be sent to you by e-mail after the registration.

A registered participant can connect only from one device. If you need to change your device during the call, you should log out and log in from new device.

The presentation of the call will be followed by a Q&A session.

2022 consolidated financial statements, press release and presentation will be available on the day of the call on the Company's website:

https://www.kmg.kz/en/investors/reporting/

For questions, please contact the Investor Relations Team at tel. +7 (7172) 78 64 34, e-mail ir@kmg.kz

About the Company:

National Company KazMunayGas is Kazakhstan's national operator for exploration, production, refining and transportation of hydrocarbons, representing the State in Kazakhstan's petroleum sector.

JSC NC KazMunayGas 2022 Trading Update

Tue, 28 Feb 2023 00:00:00 +0500

Nur-Sultan, 28 February 2023 - Joint-stock (JSC) National Company (NC) KazMunayGas (“KMG” or “Company”), Kazakhstan's national vertically integrated oil and gas company, announces its operating results for 2022.

Magzum Mirzagaliyev, Chairman of the Management Board of KMG:

“2022 has become truly full of significant and memorable events for the Company. KMG succeed to achieve positive dynamics of production indicators in all business segments from exploration and production to transportation and refining of hydrocarbons.

The Company made a historic initial public offering of its shares and it is the largest IPO on the Kazakhstani stock exchanges KASE and AIX. On 8 December 2022, secondary trading of KMG shares has been started on the stock exchanges. The listing opens a new era of our corporate development.

An important event was the strategical acquisition of an 8.44% stake in the Kashagan project from Samruk-Kazyna JSC for USD 3.8 billion. The acquisition was one of the most valuable deals for KMG in recent years. As a result of the share increase in the project to 16.88% the Company's consolidated upstream production, EBITDA and net profit indicators will improve.

Another significant event was the launch of a large-scale integrated gas chemical complex of Kazakhstan Petrochemical Industries Inc. LLP, a 49.5% stake in which KMG acquired in the reporting year. This project is designed to produce up to 500 thousand tonnes of polypropylene per year. At the end of 2022, the products of the new plant were already exported.

Regarding the sustainable development of the Company, in the reporting year we continued to keep our course of implementing ESG initiatives and reducing the carbon footprint. We also successfully continued ESG cooperation with major international partners such as Total Eren S.A, Chevron, Eni and others".

Highlights 2022:

Oil and gas condensate production increased by 1.7% to 20,012 thous. tonnes;
Oil transportation increased by 0.1% and amounted to 74,658 thous. tonnes
Hydrocarbons refining volumes at the Kazakh and Romanian refineries has grown by 5.7% to 19,900 thous. tonnes

	2022 (net to KMG)	2021 (net to KMG)	%
Proved plus Probable (2P), mln. toe	707	645	+9.8%
Oil production, thous. tonnes	22,012	21,651	+1.7%
Gas production, mln m³	8,241	8,081	+2.0%
Oil transportation, thous. tonnes	74,658	74,565	+0.1%
Oil refining, thous. tonnes	19,900	18,833	+5.7%

Operating results are represented in accordance with KMG's ownership interest in joint ventures and associates and 100% of results for consolidated subsidiaries, unless otherwise stated.

Hydrocarbon reserves

According to reserves report prepared in compliance with international PRMS standards by the international independent firm DeGolyer&MacNaughton, KMG’s proved plus probable hydrocarbon reserves (2P) amounted to 707 mln tonnes of oil equivalent (5,478 mln boe) as of 31 December 2022. Compared to 2021, the level of 2P reserves increased by 9.8%. The increase in indicators is mainly due to the increase in the Company's share in the Kashagan project from 8.44% to 16.88%, the recalculation of hydrocarbon reserves of the Kalamkas and other fields, as well as due to an increase in oil prices.

Net reserves under PRMS as of 31 December 2022

Reserves, mln toe	2022 (net to KMG)	2021 (net to KMG)	%
Proved (1P)	486	477	+1.9%
Proved plus Probable (2P)	707	645	+9.8%
Proved plus Probable plus Possible (3P)	816	761	+7.1%

Reserves, mln boe	2022 (net to KMG)	2021 (net to KMG)	%
Proved (1P)	3,775	3,694	+2.2%
Proved plus Probable (2P)	5,478	4,983	+9.9%
Proved plus Probable plus Possible (3P)	6,294	5,869	+7.2%

Upstream

The volume of KMG’s oil and gas condensate production for 2022 amounted to 22,0121 thous. tonnes (456 kbopd), an increase of 1.7% compared to a previous year. Production volume of natural and associated gas (before re-injection volumes) increased by 2.0% to 8,241 mln m³.

Oil and condensate production, thous. tonnes	2022 (net to KMG)	2021 (net to KMG)	%
OMG	5,096	5,332	-4.4%
MMG	3,049	2,944	+3.6%
EMG	2,581	2,522	+2.3%
Tengiz	5,836	5,311	+9.9%
Kashagan¹	1,402	1,344	+4.2%
Karachaganak	1,013	1,034	-2.0%
Others	3,036	3,163	-4.1%
Total	22,012	21,651	+1.7%

¹ KMG’s share in the project increased to 16.88% after 15 September 2022

Oil production at Tengiz increased by 9.9% and amounted to 5,836 thous. tonnes (128 kbopd). Gas production increased by 9.3% and totaled to 3,229 mln m³. The increase in production was due to production restriction under the OPEC+ agreement in 2021 and absence of the restrictions in 2022.

Total oil production at Kashagan decreased by 21.9% to 12,682 thous. tonnes, due to the scheduled overhaul at the offshore and onshore complexes in the middle of the reporting year and the need to carry out repair and restoration work after a gas leak at the preliminary gas withdrawal unit(“slug catcher”) in August. At the same time, oil production net to KMG increased by 4.3% to 1,402 thous. tonnes (34 kbopd) and sour gas production increased by 7.3% and amounted to 877 mln m³ due to the successful increase of KMG's share in project from 8.44% to 16.88% in 15 September 2022, due to the successful completion of the transaction for the stake buy back in the project from Samruk-Kazyna JSC.

Oil and condensate production at Karachaganak decreased by 2.0% and amounted to 1,013 thous. tonnes (22 kbopd) compared to the previous year due to a decrease in the acceptance of sour gas for processing by the Orenburg gas processing plant, because of extension of scheduled preventive maintenance at its technological facilities. Gas production increased by 2.4% to 1,944 mln m³ mainly due to an increase in sour gas re-injection at the complex gas treatment Unit-2, the commissioning of 4 compressors and an increase in gas processing volumes at the Karachaganak processing complex.

The volume of oil and condensate production at operating assets decreased by 1.4% to 13,761 thous. tonnes (273 kbopd). The decrease in oil and condensate production was due to emergency power outages from the utility company servicing Ozenmunaigas production facilities, as well as natural decline at mature fields. At the same time, the decline in oil production at operating assets was partially offset by an increase in production of 3.6% at Mangistaumunaigas and 2.3% at Embamunaigas. Gas production decreased to 2,190 mln m³ mainly due to the transfer of JSC NC "QazaqGaz" (JSC "KazTransGas") to JSC "Samruk-Kazyna" in November 2021, which includes the gas production asset Amangeldy Gas.

Midstream

The total volume of oil trunk pipelines and sea transportation increased by 0.1% to 74,658 thous. tonnes¹ compared to 2021.

Oil transportation¹, thous. tonnes	2022 (100%)	2022 (net to KMG)	2021 (net to KMG)	%
KazTransOil	40,656	40,656	41,224	-1.4%
Kazakhstan-China Pipeline	19,235	9,618	8,706	+10.5%
MunaiTas²	5,606	2,859	2,179	+31.2%
Caspian Pipeline Consortium	58,711	12,183	12,601	-3.3%
Kazmortransflot	9,343	9,343	9,855	-5.2%
Total	-	74,658	74,565	+0.1%
1 Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation. 2 Munaitas is an equity-consolidated joint venture and transportation volumes are quoted at a 51% ownership interest.

The volume of oil transportation through trunk pipelines increased by 0.9% and amounted to 65,316 thous. tonnes. There was a change in the volume of oil transportation by directions, namely in the growth of volumes in the direction of Kazakhstan refineries through pipelines to produce the required volume of oil products in the domestic market. At the same time, export volumes of oil transportation decreased due to a natural decline in oil production at mature fields, a redistribution of oil to the domestic market by shippers and the decrease in production at Kashagan due to repair works. It should be noted that according to the results of the reporting year, there was a 3.3% decrease in the transportation volumes at the Caspian Pipeline Consortium (CPC). This decrease was mainly due to repair work at Kashagan and on the Single Point Moorings of the marine terminal of CPC itself. As of today, CPC is operating normally.

The total volume of sea transportation of oil decreased by 5.2% to 9,343 thous. tonnes. The decrease was mainly due to volume decrease in the in the Mediterranean Sea that led by decrease in the export volumes of Kazakh shippers that increased supplies to the domestic market.

Trading

Sales volumes of KMG's own produced oil and gas condensate in 2022 increased by 2.1% and amounted to 22,126 thous. tonnes, 62.0% of which is attributable to export volumes.

Supplies of own produced oil and gas condensate volumes to the domestic market amounted to 8,415 thous. tonnes, including supplies of crude oil from operating assets (Ozenmunaigas, Embamunaigaz, Kazakhturkmunai and Urikhtau Operating) in the amount of 4,907 thous. tonnes to the Atyrau Refinery, Shymkent refinery and Pavlodar refinery for further oil refining and sale of oil products.

Downstream

Hydrocarbon refining, thous. tonnes	2022 (net to KMG)	2021 (net to KMG)	%
Atyrau refinery	5,224	5,473	-4.6%
Pavlodar refinery	5,480	5,407	+1.4%
Shymkent refinery¹	3,103	2,582	+20.2%
Caspi Bitum	461	464	-0.7%
Petromidia	5,258	4,586	+14.7%
Vega	373	321	+16.2%
Total	19,900	18,833	+5.7%
[1] Shymkent refinery and Caspi Bitum volumes are indicated as 50% shares

The total volume of hydrocarbon refining increased by 5.7% compared to 2021 and amounted to 19,900 thous. tonnes:

Kazakh refineries’ volume of hydrocarbon refining increased by 2.5% and amounted to 14,269 thous. tonnes (net to KMG), which was a record figure in the entire history of independent Kazakhstan. The increase in refining volumes was due to an increase in demand for oil products in the domestic market, the stable operation of Shymkent refinery in 2022 and the postponement of its scheduled overhaul to 2023;
The volume of refining at the KMG International refineries (Petromidia, Vega) in Romania increased by 14.8% and amounted to 5,631 thous. tonnes. The increase in refining volumes was associated with the stable operation of the plants and the lack of stops in the reporting year in comparison with the Petromidia refining in 2021 when there was an incident on the installation of diesel hydrotreaters.

The volume of oil products production in Kazakhstani and Romanian refineries increased by 6.8% and amounted to 18,639 thousand tonnes:

Kazakhstani refineries produced 13,128 thous. tonnes of oil products, which is 4.1% higher than in 2021, mainly due to the volumes of Shymkent refinery. At the same time, the production of oil products on the Atyray refinery was lower by 4.5% due to planned overhaul in October 2022;
Refineries of KMG International (Petromidia, Vega) produced 5,512 thous. tonnes of oil products, which is 14.1% higher than in 2021. The increase in the indicators occurred due to the corresponding growth of refining volumes at the Petromidia refinery in Romania.

Kazakhstan Stock Exchange Awards KazMunayGas for the best corporate reporting

Thu, 23 Feb 2023 00:00:00 +0500

Kazakhstan Stock Exchange JSC (KASE) awarded JSC NC “KazMunayGas” (KMG, the Company) for a number of achievements in transparency, corporate reporting and successful completion of its local IPO at the 2022 Awards Ceremony on 17 February 2023.

KMG won the Best 2021 Annual Report category for the non-financial sector and the Best 2021 Sustainability Report category. The Company focuses on the preparation of comprehensive and high-quality information about its operations, while striving to comply with international best practices in corporate reporting so that the stakeholders can better understand the Company’s business and find reliable and useful information.

The Company was also awarded the Commitment to Transparency Certificate for proper disclosures in accordance with regulatory requirements and the Company’s commitment to full and meaningful disclosure of its operations.

An important corporate event in the 2022 reporting year was KMG’s historic IPO on KASE and AIX and its corresponding attainment of public company status, for which the Company was also recognised in the Successful Local IPO category.

“We are very grateful to KASE for presenting us with such valuable awards. However, I realise that the status of a public company even more urges KMG to disclose its operations in an objective and timely manner. We will continue to maintain high transparency and adhere to the best corporate standards,” Marat Dikanbayev, Director of KMG’s Finance Department, said.

The achievement of sustainability goals has become not only a global trend for modern companies but a real necessity for every employee in his or her everyday life.

“Not only does our Company follow this global trend, but we have identified ‘Sustainable Development and Progressive Reduction of Carbon Intensity of Production’ as one of our key strategic goals. Indeed, KMG often sets high standards in Kazakhstan in this area. For example, KMG was the first company to develop its own low-carbon development programme in Kazakhstan. Comprehensive coverage is also important for the promotion of sustainable development, which is why we present so extensively our ESG initiatives and related results in our sustainability report. We are very pleased that KASE appreciated our sustainability report,” Aisha Turebayeva, Director of Strategy and Investment Portfolio Management Department, said.

Magzum Mirzagaliyev Meets with Mangistaumunaigas JSC’s and JV Caspi Bitum LLP’s Management

Mon, 06 Feb 2023 00:00:00 +0500

The head of KMG has instructed to ensure the maximum production rates at the fields operated by Mangistaumunaigas and the stable shipment of packed bitumen from Caspi Bitum.

Magzum Mirzagaliyev, Chairman of JSC NC “KazMunayGas” Management Board, held meetings with the management of Mangistaumunaigas JSC and JV Caspi Bitum LLP in Aktau on 6 February.

The attendees of the meeting held at Mangistaumunaigas JSC (MMG) discussed the day-to-day operations. M. Mirzagaliyev instructed the company’s management to develop the actions in order to maximise oil production at MMG JSC’s fields. Furthermore, the head of KMG emphasized the critical importance of the stable and incident-free operations at MMG’s fields and fulfilment of the 2023 production programme. It was also instructed to upgrade the associated petroleum gas disposal systems at the Kalamkas and Zhetybai fields.

M. Mirzagaliyev also introduced the team to Murat Mustafayev newly appointed to the position of MMG JSC’s General Director.

The Chairman of KMG’s Management Board also held a meeting with JV Caspi Bitum LLP’s management in Aktau. He noted the successful completion of the preventive maintenance campaign according to the established schedule (2 to 31 December 2022) at the Aktau Bitumen Plant. M. Mirzagaliyev highlighted the importance of implementing the project to increase the refinery’s capacity to 1.5 mtpa.

“We should strictly follow the roadmap and take the necessary action in due time. The Aktau Bitumen Plant is crucial for the timely construction of motor roads in our country, therefore the stable operation of this plant is a priority,” M. Mirzagaliyev said.

The Chairman of the Management Board pointed out that the plant’s production plan shall be implemented in full.

The plant’s management was also tasked with improving the procurement of big bags (packaging) for packed bitumen production in winter and completing the pre-feasibility study for the Plant Expansion Project.

JSC NC “KazMunayGas” Announces New Appointments

Mon, 06 Feb 2023 00:00:00 +0500

JSC NC “KazMunayGas” announces the following appointments.

Murat Mustafayev has been appointed as General Director of Mangistaumunaigas JSC.

Magzum Mirzagaliyev, Chairman of JSC NC “KazMunayGas” Management Board, has introduced M. Mustafayev to the company’s team.

Before this appointment, M. Mustafayev held the position of Oil and Gas Production Department Director at JSC NC “KazMunayGas”. He began his career as an oil production operator at Yuzhneftegas JSC. Over the years, he held executive positions at Turgai-Petroleum JSC; Chief Geologist, Adviser to General Director, Managing Director for Geology and Development, Managing Director for Prospecting and Exploration at KazMunaiGas EP JSC; General Director at KazNIPImunaigas LLP and Kazgermunai JV LLP.

Dauletzhan Khassanov, ex-General Director of Mangistaumunaigas JSC, has been appointed as Deputy Chairman of JSC NC “KazMunayGas” Management Board.

JSC NC “KazMunayGas” Announces New Appointments

Mon, 06 Feb 2023 00:00:00 +0500

JSC NC “KazMunayGas” announces the following appointments.

Kairat Seitmagambetov has been appointed as Director of Health, Safety and Environment Department at JSC NC “KazMunayGas”. K. Seitmagambetov has replaced Kairat Saktaganov, who resigned in December 2022.

K. Seitmagambetov previously held the position of Regional HSE Manager at SICIM, HSE Managing Director at KazTransOil JSC, Industrial Safety Manager at North Caspian Operating Company N.V.

First Improved Hydrocarbon Production Model Contract Signed in Kazakhstan

Mon, 06 Feb 2023 00:00:00 +0500

KazMunayGas has acquired the subsoil use right for the Kalamkas-Sea, Khazar, Auezov subsurface area

The regulations providing for the introduction of a new mechanism — Improved Model Contract (IMC) — entered into force on 10 January 2023 to enhance competitiveness and create favourable conditions for attracting further investment in complex projects.

As previously noted, representatives of major international oil and gas companies operating in the Republic of Kazakhstan, Kazakhstan Foreign Investors Council and Kazakhstan Association of Oil & Gas and Energy Sector Organisations “KAZENERGY” were engaged in developing the IMC.

A dialogue between the business and the government made it possible to balance out the interests of the government and the investor, clarify the criteria for complex projects and elaborate a temporary package of regulatory and fiscal preferences.

In practice, the above-mentioned law-making efforts resulted in direct negotiations held on 24 January 2023 between the RoK Ministry of Energy and JSC NC “KazMunayGas” for granting the subsoil use right for the Kalamkas-Sea, Khazar, Auezov subsurface area located in the Kazakhstan sector of the Caspian Sea (a complex offshore project).

Lukoil, one of the world’s largest public vertically integrated oil and gas companies, was selected as a strategic partner of the national company for hydrocarbons.

The first raw hydrocarbons production contract under the terms of the Model Contract for Hydrocarbon Production under Complex Projects* was signed on 6 February 2023.

* Note: The Model Contract for Hydrocarbon Production under Complex Projects was approved by Order No. 29 of the Ministry of Energy of the Republic of Kazakhstan dated 24 January 2023 and is publicly available in Adilet, the Legal Information System of Regulatory Legal Acts of the Republic of Kazakhstan.

The implementation of this project envisages the subscription bonus in the amount of 32 million US dollars, over 6 billion US dollars to be attracted as direct investments and about 2,000 new jobs to be created at the initial project development stage.

Troubles at Atyrau Refinery: Response Team Established, First Deputy General Director Dismissed

Fri, 03 Feb 2023 00:00:00 +0500

KMG is switching all refineries to the maximum output of petroleum products

Magzum Mirzagaliyev, Chairman of JSC NC “KazMunayGas” Management Board, has checked the progress of repair operations at the Atyrau Refinery started following the catalytic cracker shutdown.

On 1 February, the Atyrau Refinery shut down the catalytic cracker due to the increased temperature profile in its regenerators.

M. Mirzagaliyev visited the Atyrau Refinery on 3 February and held a meeting with the refinery’s management. The head of KMG instructed to establish a Response Team to be led by Arman Kairdenov, Deputy Chairman of KMG’s Management Board for Oil Refining and Petrochemicals. The Response Team will operate until the equipment failures at the Atyrau Refinery are completely eliminated.

“The main objective of the Response Team is to eliminate all failures and systemic problems existing at the Atyrau Refinery in a prompt and quality manner. My deputy, Arman Kairdenov, will stay here until the crisis is fully resolved,” M. Mirzagaliyev pointed out.

During the meeting, Rakhimzhan Zhangabylov, First Deputy General Director of Atyrau Refinery LLP, was dismissed, and a severe reprimand was issued to General Director Murat Dosmuratov. M. Mirzagaliyev also instructed Response Team Leader A. Kairdenov to investigate the incident and make further personnel decisions based on this investigation.

To prevent the national fuel deficit, the Chairman of KMG’s Management Board instructed to enhance the oil capacity utilisation at all three refineries to maximise the output of light petroleum products.

“Amid the repeated criticism expressed by the country’s leadership towards the Atyrau Refinery and the ongoing disruptions in its operation, we will take the toughest action. Such incidents are inadmissible at a time when supply of petroleum products to the domestic market is a pressing issue,” M. Mirzagaliyev concluded.

JSC NC “KazMunayGas” Announces New Appointments

Thu, 02 Feb 2023 00:00:00 +0500

JSC NC “KazMunayGas” announces the following appointments.

Bolat Baishuakov has been appointed as Director of Kazakh Gas Processing Plant LLP (KazGPP).

B. Baishuakov previously held the position of Chief Engineer — Deputy Director of KazGPP, where he was in charge of the plant’s operations. He worked for KazMunaiGas Exploration Production JSC, where he supervised KazGPP’s operations and was also employed at the Zhanazhol Oil and Gas Refinery of CNPC-Aktobemunaigas JSC for over 20 years, where he moved up the career ladder from Process Unit Operator to Chief Process Engineer.

Nakbergen Tulepov, ex-General Director of KazGPP, has been transferred to the position of KazGPP’s Deputy Director — Head of Directorate in charge of the new gas processing plant under construction in Zhanaozen.

JSC NC “KazMunayGas” reports on staff appointments

Thu, 02 Feb 2023 00:00:00 +0500

JSC NC “KazMunayGas” reports on the following staff appointments.

Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, has introduced the new chief executive officer ещ the team of KMG Kashagan B.V.

Bakhytzhan Khassanov has been appointed as General Director of KMG Kashagan B.V.

B. Khassanov previously held the post of the General Director of KMG Engineering LLP, which engages in the development of the scientific and technical expertise and implementation of the new technology for the development of the resource base, ensuring efficient operation of KMG’s fields and their digitalization.

Over the years, he worked as the Executive Director for Offshore Projects, Managing Director of JSC NC “KazMunayGas”, General Director of KazMunayTeniz OOC LLP, Deputy Director of Lukoil Overseas Service Ltd. Branch, Managing Director for Project Management, PSA LLP.

JSC NC “KazMunayGas” reports on staff appointments

Wed, 01 Feb 2023 00:00:00 +0500

JSC NC “KazMunayGas” reports on the following staff appointments.

Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, has introduced the new chief executive officer to the staff of KMG Kashagan B.V.

Malik Salimgereyev has been appointed as General Director of KMG Engineering LLP.

M. Salimgereyev previously held the positions of an expert, Deputy General Director for Production in KMG Engineering LLP, where he was engaged in supporting the accomplishment of KMG’s strategic objectives in the area of development of new oil and gas fields, applying enhanced oil recovery, and bringing the hard-to-recover reserves into development.

Over the years, he worked as Managing Director for Oil and Gas Production of JSC NC “KazMunayGas”, Deputy General Director for Health, Safety, Environment and Long-term Growth, Managing Director for Health, Safety, Environment and Drilling in KazMunaiGas EP JSC, General Asset Manager in Samruk-Kazyna JSC.

JSC NC “KazMunayGas” Announces Changes in the Management

Wed, 01 Feb 2023 00:00:00 +0500

JSC NC “KazMunayGas” announces the following changes in the Company's management.

Deputy Chairman of Management Board

Kurmangazy Iskaziyev, Deputy Chairman of Management Board for Exploration and Production, left his post in connection with the transfer to the position of the head of Kalamkas-Sea – Khazar offshore project. In addition, he will retain the post of the Director of JSC NC “KazMunayGas” representation in Aktau.

Magzum Mirzagaliyev, Chairman of the Board of JSC NC “KazMunayGas”, thanked K. Iskaziyev for the productive and high-quality work, wishing him success in his new professional field.

Dauletzhan Khasanov has been appointed Deputy Chairman of Management Board. He will supervise oil and gas production at operating assets, improvement or their effectiveness and further development as well as expansion of KMG’s resource base and efficient field development.

In different years, D. Khasanov held positions of the President of Karazhanbasmunai JSC, General Director of Ozenmunaigas JSC, Managing Director for Human Resources of JSC NC “KazMunayGas”, and General Director of Mangistaumunaigas JSC.

Deputy Chairman of Management Board

Murat Munbaev, Deputy Chairman of Management Board for Major Oil and Gas Projects, left his post in December 2022 on his own volition.

Kuanysh Kudaibergenov has been appointed Deputy Chairman of Management Board. He will supervise major oil projects.

In different years, he worked as a drilling engineer at Integra CJSC, a technical specialist at KazMunayTeniz OOC JSC, a manager of the Department for Major Oil and Gas Projects Development at JSC NC “KazMunayGas”, held senior positions at KMG-Kansu Operating LLP and Rompetrol C.A.

From 2017 to 2021 – Director of Oil Industry Development Department of the Ministry of Energy of RoK.

From June 2021 to January 2023 – Deputy General Director of Karachaganak Petroleum Operating B.V.

Deputy Chairman of Management Board

Serikkali Brekeshev has been appointed Deputy Chairman of Management Board of JSC NC “KazMunayGas”. He will supervise the development of gas projects.

From September 2021 to January 2023, S. Brekeshev held the position of the Minister of Ecology, Geology and Natural Resources.

In different years, he worked as the director of the technical policy department, deputy general director for the development of the resource base and technical policy at KazTransGas JSC; director of the gas industry development department of the Ministry of Oil and Gas of RoK; held engineering and technical positions in Mangistaumunaigas JSC and Karakudukmunai CJSC.

KazMunayGas and ENI agreed to build a hybrid power plant in the Mangistau region

Wed, 25 Jan 2023 00:00:00 +0500

On 25 January, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG) held a meeting in Astana with the delegation of the Italian oil and gas company Eni S.p.A. (ENI) led by Luca Vignati, the Upstream Director of the Natural Resources Division.

Having discussed a wide range of bilateral cooperation matters, KMG and ENI agreed in principle on joint implementation of the project for construction in the Mangystau region of a 120 MW hybrid power plant operating on renewable energy sources (wind+solar) and gas (as a cycling capacity for the purpose to stabilize the power and save gas resources). The project is aimed to achieve complete energy security and prevent production losses of OMG and the Kazakh Gas-processing Plant as a result of emergency power cutoffs in the region.

‘This project is the result of productive joint efforts of our companies and is line with the strategic objective of the development of green projects, set by the Head of our state. Apart from strengthening the region’s energy security, it will bring the important dividends in the form of inflow of investment and creation of new jobs’, Magzum Mirzagaliyev noted in his remarks.

It was also noted during the discussions, that power generation and supply to the target facilities (particularly, the facilities of Ozenmunaygas and the Kazakh Gas-processing Plant are under consideration) will make it possible to eliminate the risks of emergency shutdowns of operations due to frequent power outages.

The project implementation period is 2023-2025 (the solar generation unit is scheduled for commissioning in 2024, and wind and gas generation unit – in 2025), the anticipated budget is around 300 million U.S. dollars.

The agreement on the construction of a hybrid power plant is a continuation of KMG’s and ENI's efforts under the Memorandum of Cooperation, signed in July 2021, in the development of energy transition projects for the generation and sale of electricity.

* * *

KMG notes that information about the Company's activities that is confidential or constitutes a commercial secret, about projects for which no final decision has been made, is not subject to public disclosure. KMG discloses all important information about its activities in accordance with the legislation of the Republic of Kazakhstan and the rules of the AIX and KASE (common shares and Eurobonds) or LSE (Eurobonds) stock exchanges. In the future, the Company reserves the right not to publish information beyond what is determined by regulatory requirements.

Mangistaumunaigas JSC launches automated emissions monitoring system

Wed, 18 Jan 2023 00:00:00 +0500

Mangistaumunaigas JSC is one from first among the KazMunayGas group to launch an automated environmental emissions monitoring system (AMS). The integrated AMS equipment has been installed on the gas turbine power plant (GTPP) of Kalamkasmunaigas production office and successfully passed the tests.

Sensors have been installed directly on the gas outlet pipes of the GTPP, all the collected information is transferred to the information-and-measurement system (IMS). The information on the pollutant emissions results formed in the IMS is sent to the SCADA system installed in the operator's automated workplace. For transmission of the reporting to the Ministry of Ecology and Natural Resources of the Republic of Kazakhstan, the system generates averaged data every 20 minutes. The period of storage of the archived information is at least 5 years. The data received on-line make is possible to adjust the mode of operation of the units and control the level of their environmental impact.

"ASM enables real-time tracking of the oxide and nitrogen dioxide, carbon monoxide, and methane content in the off gases, measurement of the flow velocity, temperature, pressure and relative humidity," Rinat Ibrashev, acting Director of the Automation, Information Technology and Communications Department of Mangistaumunaigas JSC, noted.

Currently, all the information is received only by the facility operator, but in the next little while, the AMS will be integrated with the "Unified Ecological Portal" information system, following which the data will be available in real time to the competent environmental protection agency.

Commissioning of similar unique systems is not only an important stage of modernization of the enterprises, but improvement of the ecological efficiency and transparency as well.

JSC NC “KazMunayGas” pays special attention to environmental issues, since this is directly related to health and wellness of the people. One of the KMG group’s objectives within the framework of the environmental policy is continuous improvement of the environmental protection processes through their digitalization.

KMG and Abu Dhabi Ports Sign a Strategic Partnership Agreement

Tue, 17 Jan 2023 00:00:00 +0500

JSC NC “KazMunayGas” and Abu Dhabi Ports Company have signed a Strategic Partnership Agreement. The Parties express their interest in cooperation in the development of the marine fleet and coastal infrastructure in the Caspian and Black Seas.

The agreement was signed during the visit of Kassym-Zhomart Tokayev, President of the Republic of Kazakhstan, to the United Arab Emirates (UAE).

According to the document, the parties will create a joint venture based at the Astana International Financial Center to provide marine services for oil and gas projects in the Caspian Sea. The parties intend to participate in the JV through the subsidiaries, NMSC Kazmortransflot LLP and International Maritime Investments Ltd.

Under the Agreement, the parties will create a fleet to support offshore projects in the Caspian Sea (shallow-draft vessels of various types), as well as a tanker fleet, taking into account the development of alternative routes for the Kazakh oil exports (through the port of Aktau in the direction of Azerbaijan).

In addition, the JV members will explore opportunities for creating a merchant fleet: the construction/purchase of container ferries (transit from China to Europe using the Trans-Caspian route) and dry cargo ships to participate in the transportation of break-bulk cargo using the North-South route (Russia - Iran).

“The signing of the Strategic Partnership Agreement between our companies will make a significant contribution to enhanced joint cooperation. Within the framework of this agreement, a joint venture is being created, which will be actively involved in the Kazakh investment projects in Kazakhstan starting this year. We hope to use Abu Dhabi Ports' experience in servicing projects for the development of offshore oil-and-gas fields and transportation-and-logistics projects in Kazakhstan”, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas” noted.

For reference:

Abu Dhabi Ports Company (ADP) is the port, industrial and logistics operator of the United Arab Emirates. It is one of the largest holding companies in the region with a wide portfolio of large enterprises covering the key sectors of Abu Dhabi’s diversified economy. ADP manages several clusters covering ports, industrial cities and the free zone, maritime, logistics and digital technology

NMSC Kazmortransflot LLP is a wholly-owned subsidiary of JSC NC “KazMunayGas”, the national marine carrier. The company owns the largest and most modern fleet in the Republic of Kazakhstan - tankers, tugboats, as well as ships for the transportation of oversized cargo and barges for various purposes. The main routes of marine transportation of oil are routes in the waters of the Caspian Sea and routes in the waters of the Black and Mediterranean Seas.

Renowned oilman Oryngazy Iskaziyev passed away

Fri, 13 Jan 2023 00:00:00 +0500

On 13 January 2023, the well-known oilman, discoverer of a number of fields, renowned geologist, laureate of the State Prize of the Republic of Kazakhstan, Oryngazy Iskaziyev, passed away.

Oryngazy Iskazievich Iskaziyev was born in 1934 in the Atyrau region. In 1957 he graduated from the Kazakh State University named after. S.M. Kirov (nowadays, Al-Farabi Kazakh National University) with a degree in geology. He began his career as an oil production operator in the Koshkar oil industry department in the Atyrau region, held senior positions in the Embaneft association. He was among the group of geologists who discovered the Tengiz giant field. The exemplary life and honorable career of Oryngazy Iskazievich are an example for his generation and young oil workers. The work started by a true teacher and wise mentor is successfully continued today by the Iskaziyevs dynasty in the oil industry of Kazakhstan.

The staff of JSC NC “KazMunayGas” expresses its condolences to the Deputy Chairman of KMG’s Management Board of for Exploration and Production Iskaziyev Kurmangazy Oryngaziyevich, his family and friends.

KMG kickstarts an initial geological exploration

Fri, 06 Jan 2023 00:00:00 +0500

In recent years the KazMunayGas (KMG) Geological Survey specialists have fundamentally re-evaluated previous studies of sedimentary oil and gas basins of the Republic of Kazakhstan, they made a wide range analysis of documentary materials, geological and geophysical data handling and basin modeling.

As a result, the concept of KMG exploration development was revised. One of the key conclusions was that the previously undeveloped areas with perspectivity evidence but lack of up-to-date geological and geophysical data for fields delineation and exploratory drilling orientation need to be specified and studied. The Republic of Kazakhstan Subsoil Act provides for a mechanism of Mineral Resources Geological Exploration (MRGE).

For the first time during the years of independence, KMG initiates a subsoil study of such magnitude. Initial geological exploration of regional scale will be license-based, whereas previously the company operated contractual type activities (with the explicit exploration or production obligations) based on existing baseline studies. However, a large amount of this data does not meet up-to-date requirements of conditionality and quality to use the latest exploration technologies.

Studies, where MRGE mechanism is used, are a kind of research plan. They are targeted to fill the gaps of prospective but underexplored subsoil areas. These studies will provide the initial geological information, which will help to get the fundamental knowledge about the explored territories structure and get an idea about their prospectivity. Operations results will enable delineation of subsoil use (exploration and subsequent oil and gas production) blocks.

The following five new prospective regional sites within the main RK oil and gas fields were qualified for these studies:

Mugodzhary (Aktobe oblast)
Berezovsky (West Kazakhstan oblast)
Zharkyn (Mangistau oblast)
Bolashak (Mangistau oblast)
Severny Ozen (Mangistau oblast).

Each of the sites has its own oil and gas prospectivity concept, but given the exploration maturity, subsoil use contracts are not discussed yet as there are a number of geological uncertainties that need additional seismic survey.

This MRGE Project is in the list of KMG investment projects with the KZT 29.5 billion CAPEX. KMG Barlau was qualified to operate the project. MRGE licenses were obtained for all of the five sites and seismic preparation activities have already started.

Seismic exploration activity is planned for 2023-2025, followed by seismic data processing, interpretation and geotechnical evaluation (considering the new data). Based on the results of the assessment, in 2025, approval of subsoil use contracts signing is expected.

The MRGE Project is fundamentally new for KMG and shows that the strategy vector is focused on improvement and geographic expansion of KMG geological exploration, new prospective sites searching and the RK oil and gas industry investment attractiveness. The latest technologies will be used in the Project field operations and data processing/interpretation in order to reduce geological risks. Project costs reimbursement options are also discussed, including by attracting strategic partners and possible sale of the research results.

Sustainalytics updated ESG Risk Rating of KazMunayGas

Thu, 29 Dec 2022 00:00:00 +0500

In December this year, Sustainalytics[1] updated KMG's ESG risk rating to 28.4. The company's rating raised because of the enhanced corporate governance business ethics. KMG was ranked the top-20 among the 270 global oil and gas companies researched by Sustainalytics, while maintaining its stable rating. Detailed information about the updated Sustainalytics rating is available here.

Previously, KMG's ESG Risk Rating was 28.5. according to Sustainalytics.

It should be noted that the company is committed to improving its ESG risk rating and developing the necessary sustainability competencies of its employees in accordance with the international sustainable business standards.

Continuing to improve the ESG culture among employees, KazMunayGas and its subsidiaries took part in Human Rights Due Diligence Training. The trainings were organized by the UNDP in Kazakhstan with the support of the Government of Japan. During the training, more than 25 employees of KMG subsidiaries upgraded their skills in human rights.

[1]Sustainalytics is a leading independent ESG and corporate governance research, ratings and analytics firm that supports investors around the world with the development and implementation of responsible investment strategies.

KMG’s CEO Magzum Mirzagaliyev Holds Talks with Abu Dhabi Ports Management

Wed, 28 Dec 2022 12:38:43 +0500

Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, paid an official visit to Abu Dhabi, UAE, on 27 December, where he met with Mohamed Juma Al Shamsi, CEO of Abu Dhabi Ports.

During the trip, Magzum Mirzagaliyev visited Abu Dhabi Ports’ flagship Khalifa Deep-Water Port in Abu Dhabi, commissioned in 2012, as well as its offshore support base.

At the meeting, the parties discussed prospects for bilateral cooperation in offshore and near-shore cargo transport, development and investment in tankers and merchant fleet in the Caspian region.

In addition, KMG and Abu Dhabi Ports discussed opportunities for cooperation by providing services to major offshore oil and gas projects in the Caspian Sea.

Abu Dhabi Ports (ADP) is the port, industrial and logistics operator of the United Arab Emirates and is one of the region’s largest holding companies with a broad portfolio of major enterprises covering the key sectors of Abu Dhabi’s diversified economy. ADP owns and operates 11 ports and terminals (container, general cargo, Ro-Ro, cruise) in the UAE and Guinea, as well as over 550 sq. km of industrial zones facilitating trade and connecting Abu Dhabi worldwide. The port cluster is represented by the ports of Abu Dhabi, Zayed, Khalifa, Musaffah, Muharraq and Sila, among others.

KMG and Univation Sign Licence Agreement for Polymerisation Unit for Polyethylene Project

Tue, 27 Dec 2022 12:37:40 +0500

JSC NC “KazMunayGas” (KMG) and Univation Technologies (USA) signed a licensing agreement for the second polymerisation unit with an annual capacity of 625,000 tonnes of polyethylene.

The agreement between KMG and Univation covers a Process Design Package (PDP) for the polyethylene (PE) unit based on UNIPOL™ PE Process and a corresponding licence for the production of 625,000 tonnes of PE per year.

UNIPOL™ PE Process will enable the production of a wide range of mass and premium grades of polyethylene, while achieving maximum flexibility in supplying highly competitive products to domestic and foreign markets.

The agreement also covers the supply of Univation’s PE polymerisation catalyst systems, including UCAT™ B and UCAT™ J catalysts, which, when used together, will enable the mass production of blown high-density PE (HDPE), linear low-density PE (LLDPE) film and cast high-density PE (HDPE) grades. PRODIGY™ process for high-density bimodal PE (HDPE) will also be provided to the Kazakh plant.

Polyethylene is a critical feedstock for downstream products including a wide range of domestic and industrial applications. A wide variety of products are made of polyethylene, including films for food packaging, medical applications, construction and finishing materials, high-pressure industrial pipes and products for the aviation industry.

Let us recall that KMG earlier signed a licence agreement for the first unit with an annual capacity of 625 thousand tonnes of polyethylene with another licensor. Two polymerisation units will thus use processes from different licensors, which will provide the future polyethylene plant with a combined capacity of 1,250,000 tonnes per year. The plant will be located on the site of the integrated gas and chemical complex in Atyrau region.

Background:

Univation Technologies, LLC is the global leader in licensed polyethylene technology. Univation has a proven track record of delivering process, product, and catalyst technologies as well as related technical services to the global polyethylene industry for more than 50 years. More than one-third of all HDPE and LLDPE resins produced globally is supplied by the industry-leading UNIPOL™ PE Process. Univation is also the world’s leading manufacturer and supplier of conventional and advanced polyethylene polymerization catalysts designed specifically for UNIPOL™ PE Process.

Head of KazMunayGas Holds Talks on Kazakh Oil Exports to Germany

Wed, 21 Dec 2022 12:36:00 +0500

On 20 December, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG), met with Michael Kellner, Parliamentary State Secretary at the German Ministry for Economic Affairs and Climate Action (via video conference), as well as in Astana with Christian Görke, a Bundestag member from the parliamentary group of the German Left-Wing Party.

The parties discussed the export of Kazakh oil to the Schwedt Refinery. Christian Görke said that the refinery is the heart of the economy of the federal state of Brandenburg in eastern Germany. The Bundestag member expressed interest in a stable supply of raw materials from Kazakhstan via the Druzhba pipeline.

The Head of KMG confirmed the possibility of exporting Kazakh oil to Germany via the pipeline, but said contractual and technical issues need to be resolved.

“The resources of KMG’s oil producing companies are sent to domestic refineries to meet commitments to supply petroleum products to the domestic market of the Republic of Kazakhstan. KMG’s export oil is supplied to a single system trader, KMG Trading, which sends it to KMG’s Romanian refineries first, with the remaining export oil sold under long-term contracts. As instructed by the President of Kazakhstan, KazMunayGas is considering a trial shipment of oil to Germany as early as January 2023,” M. Mirzagaliyev said.

At the end of negotiations, both parties expressed hope of further joint, mutually beneficial cooperation.

The Schwedt Refinery with an annual crude oil capacity of more than 10 million tonnes supplies Berlin and much of eastern Germany with fuel.

Zhanaozen Community Council Thanks KazMunayGas Management

Thu, 15 Dec 2022 12:34:50 +0500

On 15 December, members of the Zhanaozen Community Council met with Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG). During the meeting, they expressed their gratitude for the social initiatives being implemented in the city with the involvement of KMG as instructed by President Kassym-Jomart Tokayev.

Amankos Edilov, Chairman of the Zhanaozen Community Council, said these initiatives are important for the residents of the city.

“This year, several projects have been implemented in Zhanaozen as instructed by the President of Kazakhstan. For example, in 2022, 50 students from Zhanaozen were admitted to the Iqanat School in Burabay Resort. The Zharqyn Bolashaq Project gave an opportunity for 149 students to study at 44 colleges in 11 cities in Kazakhstan. Twelve children were also admitted to republican art colleges, six pupils to National Olympic Reserve Boarding Schools, and ten young Zhanaozen children were selected to attend the Republican Physics and Mathematics School. Also this year, a Medical Centre with state-of-the-art equipment was built and commissioned with the support of KMG. We would like to thank you on behalf of the city’s residents; we hope that these initiatives will continue,” Edilov said.

Community Council members and Maslikhat deputies presented the Head of KMG with the highest award of the Zhanaozen Community Council.

Magzum Mirzagaliyev, Head of the Company, gave assurances that these initiatives would continue.

It should be noted that KMG provides full support in creating medical and sports facilities in the region and resolving unemployment issues.

KazMunayGas Annual Report 2021 won several international awards

Wed, 14 Dec 2022 10:31:43 +0500

The annual report of NC KazMunayGas JSC for the year 2021 received several international awards.

The Company won the Grand Prix of the XXV Anniversary 2022 Annual Report Contest of the Moscow Exchange (MOEX) as the best report of a non-public company. This is the first time that a Kazakhstani company has received such a high rating in this contest, which is the most authoritative in the CIS.

It should also be noted that the interactive version of KMG's annual report was awarded silver as the best interactive annual report among oil and gas companies at the international competition ARC Awards (Annual Report Competition, USA). The ARC Awards, held regularly since 1987 by MerComm Inc., has positioned itself as the world's largest annual report competition and a platform for implementing the highest standards in the industry.

The prestigious Corporate & Financial Awards (CFA, UK) honored KMG with the "Highly Commended" distinction in the "Best online report - International" category.

Along with annual report contests, the Kazakhstan Stock Exchange (KASE) has repeatedly awarded KMG with the award diplomas "For Striving for Transparency".

Receiving international awards demonstrates the right focus in the Company's activities, increasing transparency, striving to comply with the best practices of global industry leaders, as well as improving communications with stakeholders, including relationships with the investment community.

"During the preparation of KMG's annual report, we wanted to provide detailed information about the Company in all key areas of its activities so that every reader can find useful information for themselves, including the citizens of our country, institutional investors, our partners, government agencies and other stakeholders. I consider the annual report to be a good communication tool. Moreover, the transparency of KMG's activities becomes even more relevant, because after the recent IPO with the status of a public company the interest in KMG has increased significantly on the part of the investment community. I am sure that thanks to such an extensive annual report all interested parties of the Company are able to better understand what KMG is now, where it is going, what growth opportunities and potential risks it has, along with its impact on the life of the country and people in general", - Marat Dikanbayev, Director of KMG's Financial Department.

KMG and Chevron Phillips Sign Agreement to Design Polyethylene Plant

Sun, 11 Dec 2022 10:46:09 +0500

On 11 December 2022, Chairman of the Management Board of JSC NC “KazMunayGas” Magzum Mirzagaliyev met with Vice President for Technology and New Developments at Chevron Phillips Chemical Venka Chandrashekar. During the event, the parties signed a License Agreement and a Design Agreement for implementation of “Construction of integrated gas chemical complex in Atyrau Region, Phase II (polyethylene)” project.

The Agreement provides for development of design documentation for a polyethylene production unit using MarTECH^® ADL technology, and provision of a corresponding license for production of 625 thousand tonnes of polyethylene per year. Chevron Phillips Chemical’s technology will enable production of a wide range of products at the future Kazakh plant, including premium high-density polyethylene that is projected to maintain a long-term growth in global demand.

The second polymerisation unit, with capacity of 625 thousand tonnes of polyethylene per year, is at the stage of final negotiations with another licensor. Signing of an agreement is expected before mid-December this year.

Two process units will be combined into a single complex with a total capacity of 1 million 250 thousand tonnes. The choice of two leading licensors will ensure output of a wide range of basic and premium brands, the greatest production flexibility and competitiveness.

“We highly appreciate our partnership with Chevron Phillips Chemical. I am very pleased that we have reached an agreement on the polyethylene production project with Chevron Phillips Chemical regarding the most optimal configuration of the polyethylene production process. As part of this work, CPChem proposed a process for production including output of premium grades of polyethylene with characteristics meeting the current and future market trends,” noted M. Mirzagaliyev during the meeting.

After signing the License Agreement and the Design Agreement, the parties begin to develop the basic design.

“Today we have received the first results of fruitful work of our teams that prepared the License Agreement and the Design Agreement. By signing them, we are at the origins of implementing the large-scale Polyethylene project in the Republic of Kazakhstan,” added the Chairman of KMG’s Management Board.

The event also included discussions of further expansion of bilateral cooperation with U.S. partners in the petrochemical sector.

Chevron Phillips Chemical Company, LLC is a petrochemical company headquartered in the Woodlands, Texas, a major producer of ethylene, propylene, polyethylene, polyolefins, aromatic compounds and a range of other chemical products.

In addition to its own production of polyethylene in the United States, the company is also a supplier of technology for production of polyethylene around the world. The company is the licensor of the MarTECH^® slurry process. There are varieties of ASL (Advanced Single Loop with a single-loop reactor) enabling output of basic products and ADL (Advanced Dual Loop with a double-loop reactor) enabling output of basic and premium products.

Chairman of KMG’s Management Board Criticizes Duration of Planned Preventive Maintenance at Atyrau Refinery

Fri, 09 Dec 2022 10:44:13 +0500

On 9 December, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG) Magzum Mirzagaliyev held a working meeting at the Atyrau Refinery (AR) as part of his working trip, during which he emphasized that the repair work at the plant was completed behind schedule.

On 5 December, the Atyrau Refinery completed the planned preventive maintenance. Several of the plant’s key units were launched late due to internal and external factors (including low air temperature for this time of year in Atyrau).

In terms of completed work scope, the repair of Atyrau Refinery in 2022 is the largest repair in the history of refineries in the RoK. On 1 October 2022, AR shut down the 1st line of the plant and returned to process mode at the end of October, after which the 2nd line was stopped. This AR maintenance scheme made it possible to maintain uninterrupted daily production and shipment of petroleum products.

The head of KMG noted that in 2022, the Kazakh refineries would process a record oil volume and produce a record volume of gasoline, diesel fuel and bitumen. Since AR makes a significant contribution to achievement of planned indicators, the head of KMG instructed to ensure the scheduled shipment of fuels and lubricants from AR as soon as possible: gasoline − up to 5 thousand tonnes, diesel fuel − up to 4 thousand tonnes per day.

In addition, the head of KMG noted that, as instructed by the Head of State and the Government, work is underway to switch the RoK refineries to a combined processing scheme in 2023. This scheme eliminates intermediaries in sale of petroleum products.

For reference:

The Atyrau Refinery has been operating for two years without stopping for planned maintenance. Initially, AR maintenance was scheduled for autumn 2021. In order to prevent a shortage of oil products, AR maintenance was postponed 5 times.

QazPolymers-2022 Forum on Petrochemicals Begins in Kazakhstan

Fri, 09 Dec 2022 10:38:37 +0500

The first domestic QazPolymers-2022 forum convened on the initiative of JSC NC “KazMunayGas” (KMG) began on 9 December in Atyrau, becoming a landmark platform for discussing the prospects of market development for the polymer products made of domestic polymer raw materials.

Upon arrival at the forum, the representatives of academic science, development institutions, industry business associations, manufacturers of medical equipment, insulating and packaging materials, plastic pipes, as well as oil refining, petrochemical and a number of other domestic and foreign companies had first taken a study tour of the plant of Kazakhstan Petrochemical Industries Inc LLP (KPI) for production of polypropylene - the first in gas chemical complex of Kazakhstan’s economy.

Let us recall that the KPI plant (KMG has a stake in this Partnership) was launched on 8 November 2022. During his visit to Atyrau region, President Kassym-Jomart Tokayev gave it the go-ahead. When the enterprise reaches its full capacity of 500 thousand tonnes per year in 2023, it will become one of the largest players in the global polypropylene production market.

After visiting the polypropylene plant, the sightseers were welcomed at Nurlan Balgimbayev Communications Development Centre where they were greeted by Atyrau Region Akim Serik Shapkenov, Chairman of KMG’s Management Board Magzum Mirzagaliyev and professor and rector of the Atyrau Oil and Gas University Gulzada Shakulikova.

In his greeting, the head of KMG noted the importance of using Kazakhstan’s location and opportunities for creating high-tech products based on hydrocarbons.

“Today, the polymer industry is one of the fastest growing segments of the global economy and has great development potential. Favourable geography of Kazakhstan and the country’s hydrocarbon resources should be used to start producing from basic polymeric raw materials the final products with high added value for industrial, food, household, medical and other industries!” urged M. Mirzagaliyev.

The head of KMG added that the national oil and gas company sees a great role and capacity of domestic business in development of the above-mentioned prospects and is ready to support it in every way.

The forum includes two panel sessions: “Petroleum and gas chemistry − a new driver for national economy diversification” and “Kazakh polypropylene − prospects for development of domestic business of final products output”. The participants will be informed about the domestic petrochemical industry development stages (work has begun to construct a polyethylene plant with annual capacity of 1.2 million tonnes, there are plans to create a butadiene production for synthesis of rubbers with capacity up to 180 thousand tonnes of butadiene rubbers per year). The agenda includes the tasks of forming business ties and basic conditions for reducing the polymer import dependence, the measures of state support and stimulating the domestic demand to use domestic polymer raw materials. Discussions will cover the matter of engaging small and medium businesses in implementation of business projects for localisation and expanding the range of consumer goods using Kazakh raw materials. The effective business cases will also be demonstrated to the companies.

Among the forum organizers are KMG, the Association of Producers and Consumers of Petrochemical Products (Petroleum and Gas Chemical Association), NCE Atameken and the KPI plant in Atyrau.

For reference:

The volume of polypropylene and polyethylene imports in the RoK is rapidly growing and already amounted to 221 thousand tonnes in 2021, which is almost twice as much as in 2016 (123 thousand tonnes). According to official statistics, the country has up to 130 small and medium enterprises producing final products from imported polymer raw materials. The main consumers of polymer raw materials are manufacturers of plastic and rubber goods.

Polypropylene is a basic raw material for mechanical engineering, medicine, electrical engineering, production of packaging materials, containers, fibres, pipes, office equipment, garden and office furniture, as well as in construction, textile and food industries.

On IPO Results and Opening of Secondary Trading in JSC NC KazMunayGas Shares

Thu, 08 Dec 2022 11:08:28 +0500

On December 8, 2022, KMG shares started trading at the Astana International Exchange, AIX and the Kazakhstan Stock Exchange (KASE). Prime Minister of Kazakhstan Alikhan Smailov took part in the official opening ceremony of stock trading.

At the end of the ceremony, a press briefing was held with the participation of the Chief Executive Officer of the Fund A. Satkaliyev, the Chief Executive Officer of KMG M. Mirzagaliyev, the Chief Executive Officer of Astana International Exchange (AIX) R. Bekturov, Chief Executive Officer of Halyk Bank of Kazakhstan, U. Shayakhmetova, the Chief Executive Officer of Freedom Holding Corp., T. Turlov.

It should be noted that on December 02, 2022, the subscription to KMG shares within the IPO ended. During the subscription, over 129 thousand applications were received from investors for a total amount of over KZT181 billion. Following the analysis of received applications, it was decided to satisfy applications for a total amount of over KZT153 billion. Thus, as part of this IPO, the Fund sold 18,303,584 ordinary shares of KMG, which is 3% of the total number of outstanding ordinary shares of KMG.

At the same time, applications of Kazakhstani citizens amounted to 48.5% for KZT74.6 billion, applications of Kazakhstani legal entities amounted to 47.2% for KZT 72.7 billion, applications of foreign individuals and legal entities amounted to 4.3% for KZT6.6 billion.

“In the history of the stock market of Kazakhstan, the initial public offering of KMG shares is the largest local IPO with listing only on Kazakhstan stock exchanges. The key to the success of this IPO was the large-scale work carried out by the Fund and KMG to prepare for it, the rapid development of digital technologies in the financial sector, which greatly facilitated the submission of applications by individuals, as well as the openness of the Fund and the Company to the investment community. I would also like to note that applications of Kazakhstani citizens were satisfied in full on a priority basis. The Fund and KMG will continue to work on the development of the Company and further improvement of corporate governance,” Almassadam Satkaliyev, CEO of the Fund, noted.

For the first time in Kazakhstan, a direct subscription tool was used – through the Tabys mobile application and through the Kazpost branches. For direct subscription, it was possible to apply for shares directly to the shareholder - the Fund. Through this, as well as mobile applications of individual second-tier banks and broker-dealer organizations, residents of those regions and remote settlements where there are no representatives of brokerage companies were able to participate in the IPO. About 6 thousand applications for KZT1,50 billion were submitted through direct subscription.

“For us, this is not only a new stage in the development of the Company, but also a great responsibility. Tens of thousands of Kazakhstanis, domestic and foreign investors have expressed their confidence in us and have become part of KazMunayGas. At the same time, I would like to note that by today’s placement on local exchanges, the Company has come out with stable and stable production and financial indicators, a balanced and versatile portfolio of assets, good international credit ratings. At the same time, in our future activities, we will continue to strive for even greater transparency and high standards of corporate governance and will make every effort to ensure that our company flourishes in the long term for the benefit of all shareholders,” Magzum Mirzagaliyev, the CEO of KMG, emphasized.

Umut Shayakhmetova, the CEO of Halyk Bank of Kazakhstan JSC, talked about the work of mobile applications of banks and the success of their application during the KMG IPO.

“First of all, I would like to note that the KazMunayGas IPO is a landmark moment for the domestic stock market. This is the largest local placement both in terms of amounts and the number of applications submitted. At the same time, more than half of the placed volume fell on the retail segment, the demand from which was fully satisfied. We are very pleased that about 90 thousand applications, that is, 70% of their total number, were sent through our Halyk Invest service in the Halyk Homebank application. If we look at the share of our bank’s customers in the context of the total number of people who used digital channels to participate in the KazMunayGas IPO, then 53% of all new retail investors of the Company became shareholders using our application. In general, this was the first digital IPO for the country, and the first large–scale experience in the retail brokerage segment for our bank. It seems to me that both Samruk-Kazyna JSC and we have successfully coped with the tasks set. Now we can say with certainty that Halyk has become a full-fledged and influential participant in the retail investment segment,” U. Shayakhmetova said.

It should be noted that applications for the purchase of shares received from citizens of the Republic of Kazakhstan were fully satisfied. At the same time, one of the coordinators and bookrunners of the transaction - Freedom Broker - collected applications for KZT90 billion during the subscription period, of which applications for KZT67 billion were satisfied.

“The current IPO of KazMunayGas was the first one after a long break and the largest in the domestic market of Kazakhstan in its history. It stirred up our stock market and contributed to a large influx of new retail investors. We have seen a lot of interest in the placement from our customers. This is evidenced by the figures: Freedom Broker collected applications for KZT90 billion during the subscription period, which is half of the total amount. Of these, applications for KZT67 billion were satisfied, which amounted to 44% of the total amount of satisfied applications. Historically, the commodity sector has always been attractive to investors. We also forecast interest in KazMunayGas securities on the secondary market from Kazakhstani and foreign investors,” Timur Turlov, the CEO of Freedom Holding Corp., informed.

Invitation for investment proposals according to the project "Construction of the sea water destination plant "Kenderly"

Thu, 08 Dec 2022 08:53:49 +0500

The group of companies of JSC NC "KazMunayGas", with the coordination of a specially created project company "AkSu KMG" LLP, is studying the possibilities of implementing a project for the construction of a Desalination plant with a capacity of 50,000 m3/day (without Infrastructure) (hereinafter referred to as the Project) in Kenderli Mangystau region (Tokymak locality) with the involvement of a strategic partner.

In this regard, we invite potential partners to provide their vision and enlarged proposals for participation in the Project in accordance with the conditions set out in the invitation for investment proposals.

Interested eligible participants may receive an appropriate invitation for investment proposals starting December 8, 2022.

To receive an invitation, interested participants must send a corresponding request to L.Umarov@kmg.kz.

In the request, the participant must provide the following information:

Project: "Kenderli Sea Water Desalination Plant";

Company name;

Name, surname and position of the representative;

E-mail address;

Mobile phone;

Company phone.

Closing date for investment proposals:

17:00pm (Astana time) December 20, 2022.

Reference:

The invitation for investment proposals is not a public offer, JSC NC KazMunayGas and Ak Su KMG LLP do not intend to conclude an agreement on the proposed terms with everyone who responds. The purpose of the invitation is to collect information solely for the purpose of preliminary market research and analysis of the capabilities of potential partners.

Planned Preventive Maintenance Completes at Atyrau Refinery

Wed, 07 Dec 2022 10:37:26 +0500

Planned preventive maintenance (PPM) of 32 process units has been completed at the Atyrau Refinery.

The units were repaired one by one, which made it possible to avoid stopping the oil products output. It should be noted that it was the first time when the practice of staged maintenance of units was applied at domestic refineries.

The following were completed according to the PPM schedule: replacement of catalysts, internal inspection, audit and certification of reactor, tank, column, heat exchange equipment and pipelines, repair (inspection) of pumping and compression equipment, examination and inspection of process furnaces, preventive maintenance and repair of power equipment, instrumentation and automation.

During the repair, the plant worked at 50-70% capacity with output and shipment of target products. In October-November, the plant processed 581.4 thousand tonnes of oil. The average daily processing amounted to 9,531 tonnes, which is 57% of the plant’s design capacity. At that, the average daily output of petroleum products was as follows: motor gasoline − 1,570 tonnes/day, diesel fuel − 2,100 tonnes/day, jet fuel − 120 tonnes/day, liquefied gas − 155 tonnes/day.

More than 129 thousand applications for the purchase of shares were submitted by investors during the IPO of JSC NC KazMunayGas

Tue, 06 Dec 2022 10:49:40 +0500

JSC "Samruk-Kazyna" (Fund) and JSC NC "KazMunayGas" (KMG) inform on the results of the subscription for shares of KMG within IPO completed on December 2, 2022 on the Astana International Exchange (AIX) and on the Kazakhstan Stock Exchange (KASE).

During the subscription, more than 129 thousand applications were received from investors for a total amount of over 181 billion tenge. Based on the results of the analysis of received applications, a decision was made to approve applications totaling more than 153 billion tenge it was decided to satisfy applications for a total amount of over 153 billion tenge. The difference is explained by the fact that, in accordance with previously published purposes of analysis of received applications to prevent the concentration of large blocks of shares in individual large investors, the satisfaction of a number of received applications was not made in full. Applications for purchase of shares received from citizens of Kazakhstan were satisfied in full.

Thus, within the framework of this IPO the Fund sells 18,303,584 (eighteen million three hundred and three thousand five hundred and eighty-four) ordinary shares of KMG, which is 3% of the total number of placed ordinary shares of KMG.

Satisfied investor applications were distributed as follows:

applications of citizens of Kazakhstan - in the amount of about 74.6 billion tenge (48.5%);
applications of Kazakh legal entities - in the amount of about 72.7 billion tenge (47.2%);
applications of foreign individuals and legal entities - in the amount of about 6.6 billion tenge (4.3%).

In the course of determining the applications to be satisfied, priority was given to the applications received from the citizens of the Republic of Kazakhstan, after satisfaction of which (in full), the decision was made to satisfy the applications of the other applicants.

Almassadam Satkaliev, Chairman of the Management Board of the Fund:

"During the IPO of KMG, the leader of the oil and gas industry of the Republic of Kazakhstan, all instructions of the State Commission on Modernization of the Economy of the Republic of Kazakhstan in relation to the IPO of KMG were executed in full. First, priority in the sale of KMG shares was given to applications from citizens of Kazakhstan: in monetary terms, the volume of investments by citizens of Kazakhstan amounted to almost 50% of the total volume of investments raised, and by the number of submitted applications considerably exceeded the total number of applications from other persons/entities taken together. Second, the volume of alienation of shares of the national company amounted to no more than 5% of the total number of placed shares of KMG. In the aggregate, the number of submitted applications and the final sales volume make KMG's IPO the largest in the history of Kazakhstan's stock market. In addition, this IPO demonstrated the high potential of Kazakhstan's securities market, as well as a significant increase in investment literacy and activity among citizens of Kazakhstan, which is a positive factor for further implementation of the Comprehensive Privatization Plan and the transfer of a number of portfolio companies of the Fund into a competitive environment through IPO mechanisms".

Magzum Mirzagaliyev, Chairman of the Management Board of KMG:

"Listing on the KASE and AIX stock exchanges opens a new stage in the history of KMG's development. Already the largest on Kazakhstan's stock market, KMG's IPO can also be called the first "digital" IPO in Kazakhstan, as 99% of applications for the purchase of shares were submitted online. We are encouraged by the level of interest investors have shown in our company. This largely confirms KazMunayGas' position as a leader in Kazakhstan's oil and gas industry and the belief of the investor community in the potential for further growth and development of our company. We welcome all new shareholders and look forward to sharing our success with them".

On December 7, 2022 all sold shares will be distributed in accordance with the satisfied applications (in the satisfied volume) and credited to the accounts of the relevant investors with simultaneous debiting of their accounts with the relevant amounts as payment for KMG shares purchased by them. Persons who did not have time to apply during the subscription period will be able to purchase KMG shares on market conditions after the opening of secondary trading on the Astana International Exchange (AIX) and the Kazakhstan Stock Exchange (KASE), starting from December 8, 2022.

Sale of shares is carried out in accordance with Government Decree № 908 "On some issues of privatization for 2021-2025" dated 29 December 2020 and № 877 "On some issues of the transfer of shares of Joint Stock Company National Company KazMunayGas to the competitive environment" dated 5 November 2022. The final decision on the alienation of shares was adopted by the Board of Directors of the Fund and approved by Resolution No. 978 of the Government of the Republic of Kazakhstan dated 5 December 2022.

Joint coordinators and local bookrunners of the transaction were Halyk Finance JSC, Freedom Finance JSC, SkyBridge Invest JSC and BCC Invest JSC, international bookrunners - WOOD & Company Financial Services a.s. and Renaissance Securities (Cyprus) Limited.

KazMunayGas Again Topped the Environmental Transparency Rating of Kazakh Oil and Gas Companies

Mon, 05 Dec 2022 10:23:08 +0500

For the sixth consecutive year, JSC NC “KazMunayGas” maintains leadership in the environmental transparency rating of Kazakh oil and gas companies.

On 1 December 2022, in Moscow, at the UN information centre, the World Wildlife Fund (WWF), Creon Group and ACRA rating agency presented the results of the Eurasian Environmental Transparency Rating of Oil and Gas Companies 2022.

In total, the 2022 rating included 14 oil and gas companies of Kazakhstan. The rating list is based on oil, gas condensate and oil products output data according to the Ministry of Energy of the Republic of Kazakhstan.

For the sixth consecutive year, KazMunayGas maintains leadership among the Kazakh companies with North Caspian Operating Company ranked second and Karachaganak Petroleum Operating ranked third.

The rating also includes 21 oil and gas companies of the Russian Federation and 2 companies from Azerbaijan.

“Over the years of work, our rating has earned its reputation as a reliable tool for assessing the environmental transparency of businesses. Today this tool is in demand more than ever as the oil and gas industry would have to demonstrate its leadership and achievements in the field of sustainable development and ESG standards to new partners in Asia, Africa and the Middle East,” said Fares Kilzie, Chairman of the Board of Directors of Creon Group. “Long-term support from the UN as a rating partner is a high measure of quality for us and simultaneously a key incentive for further work, the rating development vector is aimed at achieving the global sustainable development goals.”

“We highly appreciate participation of our subsidiary and dependent entities which join KMG annually pursuing the policy of transparency and openness of environmental information. The company continues to follow the path of environmentally responsible business, observing the transparency principles for sustainable development of the country,” said Kairat Saktaganov, director of the Department of Labour and Environmental Protection.

Subscription for shares of JSC NC KazMunayGas within the framework of the ongoing IPO has been completed

Fri, 02 Dec 2022 14:00:35 +0500

In accordance with the previously announced deadlines JSC Samruk-Kazyna and JSC NC KazMunayGas JSC (KMG) announce the end of acceptance of investors' applications for purchase of shares during the ongoing IPO of KMG on the Astana International Financial Center exchange (Astana International Exchange, AIX) and on the Kazakhstan Stock Exchange (KASE).

The distribution of shares to investors who submitted and paid applications will be completed on December 7, 2022, after which the shares will be credited to the respective investor accounts.

Those who did not have to apply during the subscription period will be able to purchase KMG shares on market terms after the opening of secondary trading on the Astana International Exchange and the Kazakhstan Stock Exchange, scheduled for December 8, 2022.

Information about Emergency Gas Flaring at KPI Plant and Product Substitution is Untrue

Fri, 02 Dec 2022 08:42:28 +0500

The information circulating in the Internet and social media about emergency gas flaring at KPI Inc. (KPI) Polypropylene Plant in Atyrau Region is not true. Information that KPI sells third-party polypropylene as its own product is also false.

Since the start of operations, the plant has been optimising process units and has been performing controlled, short-term gas flaring. The gas is harmless. It is the same gas that burns in gas stoves and is used at home.

The plant has been running smoothly since its official launch on 8 November and is gradually ramping up production.

As of 1 December, 23,000 tonnes of polypropylene had been produced. More than 9,000 tonnes (6 trains and 18 motor vehicles) have been shipped to export and the domestic market, while 14,000 tonnes are in storage awaiting shipment. Local consumers have tested polypropylene shipments they received and have reported that the polypropylene produced by Kazakhstan Petrochemical Industries Inc. is superior to the products of other manufacturers in the Russian and local markets.

In December this year, 29 trains of marketable polypropylene are going to be produced and shipped.

We urge the citizens of Kazakhstan and mass media to trust only official sources of information, not to succumb to provocations and not to disseminate untrue information.

The Kazakh Ministry of Energy and the French Ministry for Europe and Foreign Affairs Sign Intergovernmental Agreement for Wind Power Plant Construction

Thu, 01 Dec 2022 08:41:27 +0500

On 30 November 2022 in Paris (France), Bolat Akchulakov, Minister of Energy of Kazakhstan, on behalf of the Government of the Republic of Kazakhstan, signed a Special Agreement with the Government of the French Republic on Cooperation in Combating Global Warming (Agreement).

The Agreement aims at promoting long-term bilateral cooperation between the Republics, in particular, in the field of decarbonisation and renewable energy sources (RES).

With the development of major projects that meet the objectives of the Renewable Energy and Green Technology Agreement, the Republic of Kazakhstan is much closer to achieving its goal of increasing the share of renewable energy to 15% of electricity generation by 2030.

One of such major projects to be implemented in 2026 is the construction of 1GW Wind Power Plant with 300MW-600MWh electricity storage system in Zhambyl Region (Mirny Village) by the long-term independent power producer Total Eren and Samruk-Kazyna Group.

Earlier in Paris, Samruk-Kazyna (20%), KazMunayGas (20%) and Total Eren (60%) signed a Term Sheet for the project. This document formalises the basic terms of a joint venture, shareholdings, timing and form of the transaction, sources of financing, etc.

The construction and commissioning of 1 GW Wind Power Plant meets the Parties' objectives of reducing their carbon footprint, and contributes to Kazakhstan's goal of achieving carbon neutrality by 2060.

KazMunayGas Expands Cooperation with French Partners

Wed, 30 Nov 2022 08:39:42 +0500

JSC NC “KazMunayGas” (KMG) intends to attract about €100 million of investment in oil and gas processing projects. This was agreed during a meeting between KMG and Air Liquide management.

On 29 November, KMG and Air Liquide Eastern Europe S.A. signed a relevant Cooperation Agreement. The event took place during a meeting of the Kazakhstan President Kassym-Jomart Tokayev with representatives of the French business community during his official visit to France.

According to the signed document, a joint venture, Air Liquide Munay Tech Gases LLP (ALMTG), will implement a project to build a new hydrogen unit at Pavlodar Oil Chemistry Refinery to produce 160,000 tonnes of winter diesel fuel per year. This will increase the refinery yield from 84.2% to 88.3%. The estimated project value is €60 million.

There are also plans to build a utility gas unit for KMG's Polyethylene Gas Chemical Project in Atyrau Region. The project investment is estimated at around €40 million.

The parties also signed a Memorandum of Understanding on Decarbonisation. This document is aimed at reducing ALMTG's CO₂ emissions by 33% by 2035 versus 2020 and achieving carbon neutrality by 2050. ALMTG has committed to purchase electricity in Kazakhstan from renewable sources to the maximum extent possible.

“Air Liquide is our long-standing partner based on successful cooperation at three KazMunayGas plants (Pavlodar Refinery, Atyrau Refinery, KPI). We have implemented five projects and signed long-term contracts to supply hydrogen and nitrogen for 20 years. The documents that we have signed today give impetus to the further fruitful implementation of all joint projects. We believe that the measures being taken to improve the energy efficiency of Air Liquide units will reduce OPEX and hence the price of utility gases,” said M. Mirzagaliyev, Head of KMG.

During the official visit to France, Samruk-Kazyna JSC, KMG and Total Eren S.A. also signed a Term Sheet for the construction of 1 GW Wind Power Plant with 300 MW/600 MWh electricity storage system.

The Term Sheet outlines the basic terms of the joint venture between the parties, such as shareholdings, timing and form of the transaction, sources of financing, etc. According to the agreements, TotalEnergies will hold 60% of the capital and Samruk-Kazyna and KMG will hold 20% each. The plant is expected to be commissioned in Q4 2025.

For reference:

Air Liquide is a global leader in gases, technology and services for industry and healthcare, has a presence in 75 countries. Air Liquide Munay Tech Gases LLP is a joint venture of Air Liquide and JSC NC “KazMunayGas” with 75% and 25% shares respectively, established in 2016. Since 2018 it successfully operates hydrogen and nitrogen units at Pavlodar Oil Chemistry Refinery, and since 2021 it operates hydrogen and nitrogen units at Atyrau Refinery. ALMTG also started commercial production at the newly built nitrogen unit at Karabatan near Atyrau from 2021.

In October 2021, a Memorandum of Understanding was signed between the Kazakh Ministry of Energy, Samruk-Kazyna JSC, JSC NC “KazMunayGas” and Total Eren S.A. for the construction and operation of 1GW Wind Power Plant. On 9 June 2022, the parties signed an Agreement in Principle for 1 GW Wind Power Plant Project (WPP).

KMG’s Head Magzum Mirzagaliyev Meets with Russian Partners

Fri, 25 Nov 2022 09:43:41 +0500

On 24–25 November, Magzum Mirzagaliyev, Chairman of KMG’s Management Board, visited Moscow to hold some meetings with Russian partners.

At the meeting with Transneft’s President Nikolai Tokarev, M. Mirzagaliyev first of all expressed gratitude to the Russian side for the efforts made to complete the repair of the single point mooring at the Caspian Pipeline Consortium (CPC) offshore terminal.

During the talk, M. Mirzagaliyev emphasised that thanks to the efforts of the Kazakh side and foreign shareholders, CPC is not under international sanctions; however, there are difficulties in supplying equipment to CTC. On its part, KazMunayGas, supported by the Kazakh government, is holding consultations with the EU, US and UK competent authorities to solve the issue.

“CPC is an example of a long-term successful and mutually beneficial international partnership and is the most efficient export route, providing high returns for the shareholders,” KMG’s head noted.

A meeting of M. Mirzagaliyev and CPC’s General Director Nikolai Gorban was also held in Moscow. The parties discussed the reconstruction of the 1,160 m long CPC (203 km) – Kassymov pump station pipeline (intersection) and the supply of new vessels for maintenance of the CPC offshore terminal.

Apart from that, two business meetings were held in Moscow between KMG’s management and Lukoil PJSC. The meetings were devoted to the cooperation in offshore exploration in the Kazakh sector of the Caspian Sea. Particularly, the parties discussed the implementation of the joint projects – Zhenis and Kalamkas-Sea/Khazar.

For the Zhenis project, mobilisation of the Dada Gorgud semi-submersible rig is scheduled to be commenced on 1 December, and drilling – on 15 December of this year. M. Mirzagaliyev expressed hope for the successful implementation of the project in spite of the challenges the companies face in the process.

For the Kalamkas-Sea/Khazar project, KMG and LUKOIL signed a supplementary agreement for the commercial conditions of joint implementation in June 2022. Concurrent work is underway to amend laws of the Republic of Kazakhstan in order to adopt the Improved Model Contract (IMC) for subsoil use in the area of hydrocarbons. Once the IMC is adopted, the parties will be able to submit documents to the Ministry of Energy of the Republic of Kazakhstan to obtain and conclude a subsoil use contract.

Magzum Mirzagaliyev Holds Negotiations with Sibur’s General Director

Thu, 24 Nov 2022 09:42:27 +0500

On 24 November, during his visit to Moscow, Russia, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, held negotiations with Mikhail Karissalov, Chairman of the Management Board of Sibur LLC.

The parties discussed cooperation under the polypropylene and polyethylene projects. KMG’s management informed their partners about the work being done to commence the design of a polyethylene plant (Silleno JV).

“The polyethylene project is under special control of the Kazakh government, given the expected effect on the national economy and importance for the development of the petrochemical industry,” M. Mirzagaliyev noted.

On 7 November, Samruk-Kazyna JSC, JSC NC “KazMunayGas”, SIBUR Holding PJSC and representatives of the operators of the polypropylene and polyethylene petrochemical projects signed the basic documents on setting up joint ventures based on KPI Inc. LLP and Silleno LLP.

According to the documents, the parties outlined the conditions of partnership in the joint ventures that are within the special economic zone − National Industrial Petrochemical Technopark − in Atyrau. These include investments in the 1,250,000 tpa polyethylene plant construction project and the procedure for selling the finished product of the 500,000 tpa polypropylene plant.

Let us recall that on 18 November, KPI Inc.’s polypropylene plant shipped the first 1,500 tonne batch of the finished product.

KazMunayGas Is the First in Kazakhstan to Purchase Renewable Energy Certificates

Thu, 24 Nov 2022 09:41:21 +0500

In order to reduce its indirect greenhouse gas (GHG) emissions, JSC NC “KazMunayGas” (KMG) has purchased International Renewable Energy Certificates (I-REC) and made a claim for 8.5 million kWh, which corresponds to the expected electricity consumption by KMG’s headquarters in 2022.

GHG emissions are divided into three scopes: Scope 1 includes direct emissions of a company released during its operations. Scope 2 encompasses indirect GHG emissions from consumed energy, for example, by the office of a reporting company (it is important to understand what sources the company receives energy from: coal plants, nuclear power plants, hydro power plants, etc.). Scope 3 includes all other indirect emissions that are related to the operations of a company but are not directly controlled by it.

Voluntary I-RECs confirm information about the electricity generation from a renewable energy source (RES). A certificate is linked to 1 MWh of clean electricity, geographic location of the power plant and time period of electricity generation. Certificates are issued on the basis of an international standard developed by the International REC Foundation and are acknowledged by international organisations, such as GHGP, CDP, RE100, ISO, etc. I-RECs are traded worldwide and are issued in 51 countries.

Companies that purchase I-RECs may, according to international practice, claim the reduction of GHG emissions from the use of electricity within Scope 2. ‘Green’ certificates also enable green electricity producers to get a new market mechanism of financial support through the sale of such certificates.

KazMunayGas purchased certificates issued for a solar power plant in one of the country’s regions. This is the first such experience in Kazakhstan. The international renewable energy certification platform started its work in Kazakhstan this year. The I-REC issuer approved the ECOJER Association that keeps accounts of registrants in the I-REC registry, checks documents confirming the origin of electricity from RESs and issues certificates on request of applicants.

By purchasing ‘green’ certificates, KazMunayGas demonstrates its commitment to sustainable development and ESG principles, consistently implements the corporate carbon footprint reduction programme, while rendering financial support in RES development.

Background:

About JSC “National Company “KazMunayGas”

JSC “National Company “KazMunayGas” is a leading vertically integrated oil and gas company in Kazakhstan. KMG manages assets across the entire production cycle from exploration and production of hydrocarbons to transportation, refining and provision of dedicated services. Founded in 2002, the Company represents Kazakhstan’s interests in the national oil and gas industry.

About I-REC

The International REC Foundation (I-REC Standard) is a non-profit organisation that provides a robust standard for tracking green attributes. The I-REC Standard is acknowledged by major reporting frameworks such as the Greenhouse Gas Protocol (GHGP), Carbon Disclosure Project (CDP), and RE100 as a reliable backbone for credible and auditable tracking instruments. Accordingly, I-RECs are issued on the basis of this standard.

KazGPP Commissions New Compressor Units

Thu, 24 Nov 2022 09:39:27 +0500

On 23 November in Mangistau region, Kazakh Gas Processing Plant LLP (KazGPP) held an official ceremony to reward 79 plant employees who were actively engaged in the construction and commissioning of new compressor units.

Let us recall that on 1 November the plant commissioned five new Ariel compressor units with Waukesha gas reciprocating engines (made in the U.S.), which enabled a 20% increase in the volume of gas taken for processing.

It is compressor units that compress feed gas, and then the compressed gas is sent to the sulphur removal stage. The new compressor units were commissioned under the New Compressor Unit Construction project according to the 2022–2025 KazGPP equipment reliability programme adopted in January 2022, which will ensure the smooth operation of the plant until a new gas processing plant in Zhanaozen is commissioned. The programme encompasses the replacement of the main worn-out and obsolete column, pumping and compressor equipment as well as tanks and vessels. The main goal of the project is to ensure industrial, fire and environmental safety and increase the output of the finished product through the increased volume of feed gas taken for processing.

KazGPP (part of JSC NC “KazMunayGas”) utilizes associated petroleum gas produced during the operation of the Uzen oil field and is the main supplier of liquefied gas in Mangistau region. From January to November 2022, the plant completed all the objectives related to production and shipment of commercial gas for the region’s needs. Whereas, construction and assembly works, connection to the existing utilities and commissioning of new compressors were performed without stopping the operations.

Approaches to the IPO of KazMunayGas discussed with QAMS experts

Wed, 23 Nov 2022 07:21:03 +0500

Approaches to the IPO of JSC NC KazMunayGas (KMG), determining the share price, as well as further measures on improving the efficiency of corporate governance of public companies of the Samruk-Kazyna Group were discussed with the QAMS experts.

On November 21, representatives of Samruk-Kazyna JSC (Fund) and KMG met with experts of the Kazakhstan Association of Minority Shareholders (QAMS). Daniyar Temirbayev and Arman Batayev, the members of the QAMS Governing Council, represented the Association. Dauren Karabayev, Deputy Chairman of the Management Board for Economics and Finance KMG and Dastan Adihodjayev, the Director of the Privatization and Assets Restructuring Department of the Fund, participated at the meeting on behalf of the Fund Group.

QAMS expressed support for the idea of the IPO as a step towards denationalization and greater transparency of state-owned companies. The initiative of the Association “Public Control of National Companies through Stock Market Instruments”, which was presented to government agencies in February 2022, finds practical application in the framework of the People’s IPO.

The parties raised issues of improving the corporate governance system in the Samruk-Kazyna Group of companies, including the introduction of a procedure for selecting independent directors that meets the interests of all shareholders, including minority shareholders. The agenda of the discussion is especially relevant now, when KMG shares are placed among retail investors. QAMS believes that effective corporate governance is a value that is important for investors, as it is taken into account when making investment decisions, increases the attractiveness of the company for the stock market and expands its opportunities to attract capital.

“It is important what will happen after the IPO. In this context, we are convinced that the Samruk-Kazyna Fund has every opportunity to ensure the introduction of the best corporate practices and a reference corporate culture in Kazakhstan, part of which will be a high level of communication with minority shareholders. Moreover, we believe that progress in improving corporate governance in the Fund Group should become the basis for subsequent legislative changes,” — said Daniyar Temirbayev, Executive Director of QAMS.

The experts were informed in detail about the process of forming the value of KMG shares for the IPO offer. The set price has been agreed with the State Commission for the Modernization of the Economy of the Republic of Kazakhstan and the Board of Directors of the Fund. Representatives of the Samruk-Kazyna Group noted that the offer price of KMG shares during the IPO was determined taking into account the Company’s production and financial indicators, valuation models of investment banks, current market situation and task to ensure maximum coverage of citizens of the Republic of Kazakhstan, and, importantly, contains according to analytical reports of leading Kazakhstani broker-dealer organizations (including among those not directly involved in the preparation and conduct of the IPO) the potential for further growth in the secondary market under favorable market conditions.

“It is necessary to understand that QAMS during the IPO represents the side of buyers — potential investors. The buyer, as a rule, puts more skepticism and risks into the stock offering price, wanting to reduce their risks due to a lower price. However, the market provides a real assessment of the company. In this sense, an IPO is a mechanism to get a market valuation of a company. We believe that after the discussion with the issue of setting exactly such a price for the IPO of KMG, it became more and more clear,” — said Arman Batayev, a member of the QAMS Governing Council.

The issues of optimizing the expenses of the Group’s public companies and the long-term motivation of the management of public companies were also touched upon during the dialogue. Increasing the level of communication with minority investors is another topic for discussion with the expert community. The parties agreed on cooperation and the need to use a dialogue platform in order to ensure transparency of the People’s IPO.

For information: KMG NC is the leading vertically integrated oil and gas company in Kazakhstan with a production volume of 16.1 million tons of oil and gas condensate for M9 2022. The Company’s revenue for M9 amounted to KZT 6.8 trillion, increasing by 47.4% as compared to the same period last year. Net profit reached KZT 1.2 trillion, increasing by 15.9%. Free cash flow, adjusted for attracted financing for the acquisition of a 50% stake in KMG Kashagan B.V., amounted to KZT 730 billion. The IPO of JSC NC KazMunayGas is carried out under the Privatization Plan for 2021-2025, approved by the Government of the Republic of Kazakhstan.

JSC National Company KazMunayGas announces its financial results for the nine months of 2022

Tue, 22 Nov 2022 05:33:59 +0500

Astana, November 21, 2022 - JSC National Company KazMunayGas ("KMG", the "Company"), Kazakhstan's national vertically integrated oil and gas company, publishes its interim condensed consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) 34 "Interim Financial Statements" for the three and nine months ended September 30, 2022, with a report on the results of the review of interim financial information by an independent auditor.

Financial highlights for nine months of 2022^[1] compared to nine months of 2021 (includes 100% stake in KMG Kashagan B.V. by full consolidation method):

Revenue increased by 47.4% to 6,776 bn tenge (USD 14,774 mn) compared to 4,597 bn tenge (USD 10,825 mn);
EBITDA increased by 41.8% to 2,020 bn tenge (USD 4,405 mn) compared to 1,425 bn tenge (USD 3,354 mn);
The Company's net profit including share in income of joint ventures and associates increased by 15.9% and amounted to 1,162 bn tenge (USD 2,534 mn);
Net profit adjusted for the share in profits of joint ventures and associated companies [2] was 634 bn tenge (USD 1,382 mn) compared to 637 bn tenge (USD 1,500 mn);
FCF calculated in accordance with updated dividend policy amounted to – 21 bn tenge (USD – 46 mn) compared to 425 bn tenge (USD 1,000 mn) year-on-year;
Gross debt as of September 30, 2022 amounted to 4,302 bn tenge (USD 9,024 mn) compared to the indicator as of December 31, 2021 in the amount of 3,746 bn tenge (USD 8,676 mn);
The Company's net debt as of 30 September 2022 amounted to 2,186 bn tenge (USD 4,585 mn) compared to 1,987 bn tenge (USD 4,603 mn) as of December 31, 2021.

Name of the indicator	Unit of measure.	9М 2022	9М 2021	%
Dated Brent[3], average	$/bbl.	105.51	67.92	+55.4%
Dated Urals³, average	$/bbl.	81.07	66.19	+22.5%
Exchange rate, average	KZT/USD	458.60	424.70	+6.1%
Revenue	bn tenge	6,776	4,597	+47.4%
Share in profit of JVs and associates, net	bn tenge	779	464	+67.7%
Dividends received from joint ventures and associates	bn tenge	250	157	+59.7%
Net profit	bn tenge	1,162	1,003	+15.9%
Net profit adjusted for the share in profit of JVs and associates	bn tenge	634	637	-0.5%
EBITDA[4]	bn tenge	2,020	1,425	+41.8%
Adjusted EBITDA[5]	bn tenge	1,492	1,059	+40.9%
CAPEX (accrual basis)	bn tenge	323	295	+9.5%
CAPEX (cash basis)	bn tenge	288	291	-0.9%
FCF (on dividend policy)[6]	bn tenge	-21	425	-105.5%
Adjusted FCF adjusted for Kashagan shares acquisition financing[7]	bn tenge	730	425	+72.0%
Gross debt [8]	bn tenge	4,302	3,746[9]	+14.8%
Net debt[10]	bn tenge	2,186	1,987⁸	+10.0%

Impact of Kashagan call option exercise on financial performance

On September 15, 2022 the Company increased its stake in KMG Kashagan B.V. from 50% to 100%. KMG Kashagan B.V. owns 16.88% in the Kashagan project.

Previously, 50% interest in KMG Kashagan B.V. in the consolidated financial statements of KMG was reflected by equity method as investment in joint ventures, which implies inclusion of only 50% interest in net assets of KMG Kashagan B.V. in consolidated assets of KMG and 50% interest in net income of KMG Kashagan B.V. in the consolidated income statement of KMG.

Production results for the first nine months of 2022[11] :

Oil and gas condensate production increased by 0.9% to 16,060 thousand tonnes;
Oil transportation volumes amounted to 55,085 thousand tonnes compared to 55,727 thousand tonnes in the same period last year;
The volume of refining of hydrocarbons at Kazakhstani and Romanian refineries in aggregate increased by 5.8% and amounted to 14,896 thousand tonnes.

	9М 2022 (net to KMG)	9М 2021 (net to KMG)	%
Oil production, thous. tonnes	16,060[12]	15,923	+0.9%
Gas production, mn m³	5,942¹²	5,860	+1.4%
Oil transportation, thous. tons	55,085	55,727	-1.2%
Oil refining, thous. tonnes	14,896	14,083	+5.8%

Review of financial results for nine months of 2022[13] and nine months of 2021 (includes 100% interest in KMG Kashagan B.V. by full consolidation method)

Revenue

Revenue amounted to 6,776 bn tenge (USD 14,774 mn), an increase of 47.4% in the first nine months of 2021.

The revenue dynamics were positively affected by a 55.4% year-on-year increase in the average Brent crude oil price and weakening of the average exchange rate of the tenge against the US dollar by 8.0%.

Share in profits of joint ventures and associates

The share in income of joint ventures and associates increased by 67.7% to 779 bn tenge (USD 1,698 mn), mainly due to an increase in profits of “Tengizchevroil” LLP by 287 bn tenge (USD 574 mn) and Caspian Pipeline Consortium by 25 bn tenge (USD 45 mn).

EBITDA

EBITDA was 2,020 bn tenge (USD 4,405 mn), up 41.8% compared to 1,425 bn tenge (USD 3,354 mn) in the same period of 2021, driven by a 50.4% growth in Oil & Gas Exploration and Production of oil and gas and a 38.6% growth in Refining and trading of crude oil and refined products segments. This growth was achieved due to increase of international prices for crude oil and petroleum products.

Adjusted EBITDA

Adjusted EBITDA, which represents dividends received from joint ventures and associates instead of share in profits of joint ventures and associates, was 1,492 bn tenge (USD 3,254 mn), showing a 40.9% growth.

Net profit

The Company's net profit increased by 15.9% from 1,003 bn tenge (USD 2,361 mn) to 1,162 bn tenge (USD 2,534 mn).

Net profit adjusted for the share in profit of JVs and associates

The Company's net profit adjusted for the share in profit of JVs and associates decreased by a modest 0.5% from 637 bn tenge (USD 1,382 mn) to 634 bn tenge (USD 1,500 mn).

Cost of purchased oil, gas, oil products and other materials

The cost of purchased oil, gas, oil products and other materials in the reporting period increased by 52.6%, reaching 3,951 bn tenge (USD 8,615 mn). The increase in cost of sales was largely due to an increase in crude oil and oil products prices.

Operating expenses

Production costs increased by 61.9% to 826 bn tenge (USD 1,802 mn), including due to growth of wage costs workers in the regions of operations as a whole KMG .

Transportation and selling expences were 145 bn tenge (USD 315 mn), up 9.2% YoY.

General and administrative expenses increased by 17.7% to 104 bn tenge (USD 226 mn) due to an increase in salaries for employees in the regions where the Company operates.

Taxes other than income tax increased by 60.0% to 508 bn tenge (USD 1,108 mn) mainly as a result of an increase in rent tax and MET due to higher oil prices.

Finance costs amounted to 228 bn tenge (USD 496 mn), an increase of 22.9% mainly due to increase in interest expense on borrowings and bonds due to weakening of tenge and some increase in interest rates.

Capital expenditure

The Company's capital expenditure (on an accrual basis, as disclosed in the segment reporting) was 323 bn tenge (USD 704 mn), up 9.5% primarily in the oil and gas exploration and production segment.

Free cash flow

Free cash flow recalculated under the new dividend policy amounted to – 21 bn tenge, down 105.0% YoY. The negative value of the indicator is due to the costs incurred for the acquisition of a stake in Kashagan. At the same time, the adjusted free cash flow to raise financing for the buyout of this stake in Kashagan amounted to 730 bn tenge, showing an increase of 72.0%.

Debt management

Debt indicators

Name of the indicator	Unit.	30 September 2022	31 December 2021	%
Bonds	bn tenge	3,401	2,706	+25.7%
Loans	bn tenge	901	1,040	-13.4%
Total debt	bn tenge	4,302	3,746	+14.8%

Numbers may not add up due to rounding.

Total debt as of 30 September 2022 was 4,302 bn tenge (USD 9,024 mn), an increase of 14.8% in tenge terms and 4.0% in US dollar terms compared to 31 December 2021.

As of 30 September 2022, amounts owed to Samruk-Kazyna JSC are mainly represented by amounts owed for exercise of the Option in the amount of 345 bn tenge. This amount in the Company's consolidated financial statements for the period is included in other current financial liabilities. At the same time the total debt of the Company, including this debt to Samruk-Kazyna JSC for execution of the Call Option to buy back Kashagan shares, amounted to 4,647 bn tenge (USD 9,748 mn).

Net debt

Net debt as of September 30, 2022 was 2,186 bn tenge (USD 4,585 mn) which is 10.0% higher in tenge terms than as of December 31, 2021. At the same time the Company's net debt including the debt to Samruk-Kazyna for exercise of the Kashagan shares Buy-Back Option was 2,531 bn tenge (USD 5,310 mn).

Cash and cash equivalents

Consolidated cash and cash equivalents including deposits

Name of the indicator	Unit	30 September 2022	31 December 2021	%
Cash and cash equivalents	bn tenge	1,374	1,141	+20.4%
Short-term deposits	bn tenge	681	562	+21.1%
Long-term deposits	bn tenge	61	56	+8.7%
Cash and cash equivalents including deposits	bn tenge	2,116	1,759	+20.3%

The numbers may not add up due to rounding.

Consolidated cash, cash equivalents, including cash in the form of deposits as of 30 September 2022 increased by 20.3% compared to the indicator as of 31 December 2021, and amounted to 2,116 bn tenge (USD 4,438 mn). In US dollar terms, it also increased by 9.0% to USD 4,438 mn compared to USD 4,074 mn as of 31 December 2021.

Key corporate events since the beginning of 2022:

On 21 January 2022, Atyrau Refinery made full early repayment of the loan from Eximbank in the amount of USD 604 mn (259 bln tenge), including interest.
Since 15 April 2022, Mirzagaliev M.M. has been appointed as the Chairman of the Management Board of KMG.
Since the beginning of 2022 new appointments have been made to the structure of KMG's Board of Directors and Management Board. As of 21 August 2022, the Board of Directors of KMG consists of eight members (Walton K.D. - Chairman of the Board of Directors, Mirzagaliev M.M., Karabalin U.S., Zhanadil Ye.B., Auganov G.K., Holland F.M., Miller T.G., Khairova A.A. ), the Management Board of KMG consists of 8 people (Mirzagaliev M.M. - Chairman of the Board, Iskaziyev K.O., Karabayev D.S., Munbayev M.K., Abdulgafarov D.Ye., Kairdenov A.K., Zakirov B.K., Lavrenov V.S.).
On 13 June 2022, the Company completed the acquisition of a 49.5% stake in Kazakhstan Petrochemical Industries Inc. LLP, which is implementing a large-scale project for the construction of a polypropylene plant.
On 20 June 2022, the Company, in accordance with the decision of Samruk-Kazyna JSC and the National Bank of the Republic of Kazakhstan, completed the payment of dividends on KMG shares for 2021 in the amount of 327.80 tenge per share for a total amount of 200 bln tenge.
On 23 June 2022, KMG opened its representative office in Aktau in order to strengthen work in the region of presence on issues of interaction with local executive bodies, trade unions of KMG subsidiaries and contractors, implementation of projects to ensure employment of the population, control over the execution of production programs, as well as fields development.
In July 2022, the Company acquired a 49% stake in Petrosun LLP, the main activity of which is the sale of liquefied petroleum gas and petroleum products.
On 12 September 2022 the Company placed 752 bn tenge bonds with 3.0% coupon rate and maturity in 2035 to finance execution of a call option to buy back KMG Kashagan B.V.'s shares from Samruk-Kazyna JSC.
On 15 September 2022, the Company exercised its right under a call option agreement entered into in 2015 and acquired from Samruk-Kazyna JSC a 50% interest in NC KMG Kashagan B.V. for USD 3.8 bn. The Company is the owner of 16.88% in the Production Sharing Agreement for the North Caspian Project (the Kashagan project).
27 September 2022 Standard & Poor's Ratings Services upgraded the Company's rating to BB+, Outlook Negative, following the call option exercise to buy back KMG Kashagan B.V.'s shares from Samruk-Kazyna JSC.
On 27 October 2022 the Company approved a new dividend policy in respect of its shareholders which sets out a new dividend policy and corresponding procedure for dividend payments.
In November 2022 hydrocarbon production at Kashagan is fully resumed after the shutdown of the Bolashak integrated oil and gas treatment facility on 3 August 2022, due to the detection of signs of gas leakage at the production site.
On 7 November 2022 Samruk-Kazyna announced the local shares offering (IPO), in which it plans to sell up to 30,505,974 common shares (5%) of the Company owned by Samruk-Kazyna 551,698,745 shares at a price of 8,406 tenge per share. Acceptance of applications by investors began on 9 November 2022 and will end for institutional investors on 30 November 2022, and for retail investors - on 2 December 2022.
8 November 2022 the President gave the start of a large-scale integrated gas chemical complex LLP Kazakhstan Petrochemical Industries Inc. designed to produce up to 500 thousand tonnes of polypropylene per year.

On 12 November 2022 work was fully completed on the replacement of the buoyancy tank at the Single Point Mooring, SPM-1 of the Caspian Pipeline Consortium. Thus, the SPM-1 and SPM-3 are currently in operation, which implies restoration of daily oil shipment volumes at the offshore terminal.

^[1] Amounts are shown in US dollars for convenience at the average exchange rate for the respective period (the average rates for the nine months of 2022 and 2021 are 458.60 and 424.70 KZT/USD, respectively; the end of the period - 30 Ыузеуьиук 2022 and 31 December 2021 are 476.71 and 431.80, respectively). The exchange rates at the end of the period - 30 June 2022 and 31 December 2021 are KZT/USD 476.71 and KZT/USD 431.80, respectively. U.S. Dollars, respectively).

[2] Net profit adjusted for share in profit of joint ventures and associates = Net profit plus dividends received from joint ventures and associates less share in profit of joint ventures and associates

[3] Source: S&P Global Platts.

[4] EBITDA = revenue plus share in income of joint ventures and associates, net, minus cost of purchased oil, gas, petroleum products and other materials minus production costs minus general and administrative expenses minus transportation and distribution costs minus taxes other than income tax.

[5] Adjusted EBITDA = revenue plus dividends received from joint ventures and associates less cost of purchased oil, gas, petroleum products and other materials less production costs less general and administrative expenses less transportation and distribution costs less taxes other than income tax. Adjusted EBITDA for 9M 2021 excludes dividends from joint ventures and associates of KazTransGas JSC.

[6] Free cash flow (according to dividend policy) = consolidated cash flow of the Company from operating activities (including dividends received from joint ventures and associates, but not including net change in working capital in terms of advances received for oil supply) minus acquisition of fixed assets (including advances for fixed assets) minus acquisition of intangible assets minus acquisition of field development assets minus acquisition of appraisal and exploration assets minus acquisition of a share in a subsidiary/joint venture plus funds received from the sale of participatory interests in a subsidiary/joint/associated company (excluding funds received from the transfer of the Company's assets into a competitive environment according to the lists, approved by Resolutions No. 1141 of the Government of the Republic of Kazakhstan dated December 30, 2015 and No. 908 of December 29, 2020) based on the results of the reporting period

[7] Adjusted free cash flow to raise 751,631 bn tenge in financing for the buyout of Kashagan shares

[8] Total debt at the end of the reporting period = bonds plus loans (short-term and long-term). Guarantees issued are not included in the calculation.

[9] Gross debt and net debt are shown as of 31 December 2021.

[10] Net debt at the end of the reporting period: Bonds plus loans minus cash and cash equivalents minus bank deposits (short-term and long-term). Guarantees issued are not included in the calculation.

[11] Production results are stated in accordance with KMG's shareholdings in joint ventures and associates and 100% for consolidated subsidiaries. More detailed information is available in the press release on production results for the nine months of 2022 at: https://www.kmg.kz/eng/investoram/reporting-and-financial-result/.

[12] KMG Kashagan B.V.'s oil and gas production volumes are included at 50% until 15 September 2022 and 100% after 15 September 2022.

[13] On 11 March 2021 the Company and Samruk-Kazyna signed a trust management agreement in relation to 100% of ordinary shares of KazTransGas JSC ("KTG"). On 9 November 2021 the Company transferred 100% of shares of KTG to Samruk-Kazyna for KZT 1 and the trust management agreement was terminated. The transaction was preceded by a number of legal and financial conditions, including obtaining approvals from the state authorities and KMG's creditors. The last of the conditions was fulfilled on November 8, 2021. As from 8 November 2021, KTG was classified as a discontinued operation. For further details, see Note 4 to the Interim Condensed Consolidated Financial Statements for the three and nine months ended 30 September 2022.

KazMunayGas Oil Workers Actively Involved in Presidential Elections in Kazakhstan

Sun, 20 Nov 2022 04:20:26 +0500

This 20th day of November 2022, the employees of KazMunayGas Group actively express their will in the early elections of Kazakhstan’s President. In unison, the production personnel make their way to the polling station to vote for the future of their country.

The oilmen are excited to go to the elections to choose the one who will lead their country for the next 7 years. Alibi Zholdybayev, a shop floor operator at Karazhanbasmunai JSC, was one of those who rushed to the elections before his shift.

“I cannot miss such a big day, when the future path of our motherland is being chosen. Me and my peers, we cast our votes. We expect favourable developments that give priority to the interests and well-being of the people,” said Alibi Zholdybayev.

On this day, along with KMG’s sizeable team, thousands of oilmen of Mangistaumunaigas JSC choose their future as well. Yedil Bekmuratov, a social team member of the Kalamkasmunaigas Production Office (Mangistaumunaigas JSC), was among the first to come to the polling station.

“It is encouraging that oil workers are active voters and exercise their constitutional right. I believe and hope that Kazakhstan has a bright future,” says Yedil Bekmuratov.

Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas, also voted and wrote in his twitter accountthat he “cast his vote ... for a strong Kazakhstan!”

Observers note a high voter turnout, level of organisation, transparency and activity of voters. Let us recall that over 10,000 polling stations were opened for the presidential elections in Kazakhstan. On top of that, 68 polling stations operate in 53 countries, including Romania and Georgia, where Kazakh employees of KMG’s subsidiaries also take an active part in the elections of Kazakhstan’s President.

KPI Plant in Atyrau Sends the First Train with Polypropylene for Export

Fri, 18 Nov 2022 04:23:25 +0500

On 18 November 2022, the plant of Kazakhstan Petrochemical Industries Inc. (KPI) located in Atyrau sent for export its first container train (62 containers) loaded with 1.5 thousand tonnes of polypropylene.

At the same time, the first batches of polypropylene were shipped to domestic processing companies — RGC-Kaspi LLP, Universal LLP, ALPHA PLAST LLP. The plant intends to fully provide Kazakhstan’s domestic market with polypropylene.

By the end of this month, it is planned to supply products to consumers in Kazakhstan and send for export another 6 container trains to carry more than 9 thousand tonnes.

The quality of the Kazakh plant’s products is confirmed by SGS, a world-famous Swiss company, whose laboratory is already operating at the plant.

Let us recall that the plant was launched by KPI (JSC “National Company “KazMunayGas” has a stake in this company) on 8 November 2022 and is the first gas chemical complex in the history of Kazakhstan’s economy. During his visit to Atyrau region, President Kassym-Jomart Tokayev gave the go-ahead for the enterprise. When the plant reaches its full capacity of 500 thousand tonnes per year, it will be put on a par with the largest players in the global polypropylene production market.

Polypropylene is a basic raw material not only in mechanical engineering, medicine, electrical engineering. It is also used to produce packaging materials, containers, fibres, pipes, office equipment, garden and office furniture, as well as in construction, textile and food industries.

KazMunayGas Roadshow Schedule for 18–24 November

Thu, 17 Nov 2022 04:25:25 +0500

JSC NC “KazMunayGas” (KMG) announces its upcoming meetings with retail investors as part of a roadshow arranged by the company to provide a detailed and broad coverage of KMG’s local IPO on the Astana International Exchange (AIX) and the Kazakhstan Stock Exchange (KASE). Representatives of Samruk-Kazyna JSC and KMG and financial consultants of the company will speak at the meetings.

During the roadshow, the company will make a presentation for the people of Kazakhstan to share detailed information about KMG’s activities, investment appeal and dividend policy, as well as the parameters of IPO share placement and the procedure for submitting applications for share purchase.

Meetings with retail investors are held from 14 November in 17 regional centres and cities of republican significance: Almaty, Astana, Shymkent, Atyrau, Turkestan, Karaganda, Aktobe, Zhezkazgan, Kokshetau, Konayev, Petropavlovsk, Taldykorgan, Taraz, Ust-Kamenogorsk, Uralsk, Semey, Aktau, Kyzylorda, Kostanai and Pavlodar.

Schedule of meetings with retail investors at the KazMunayGas roadshow

(Stay tuned to KMG’s website for updates)

Date	Time	City/Town	Venue	Address
18 November	10:00	Taraz	Arai Plaza Hotel, small conference hall	93a Tole bi Street
	11:00	Taldykorgan	Aiser Hotel, conference hall	128/130 Akyn Sara Street
	10:00	Ust-Kamenogorsk	Dademan Oskemen Tavros Hotel	11/1 Permitin Street
19 November	15:00	Uralsk	Park Hotel Uralsk	Samal 3 Microdistrict
19 November	10:00	Semey	Semey Hotel	26 Kabanbai Batyr Street
22 November	10:00	Kyzylorda	Prima Park Business Centre (at Park Hotel), conference hall	4 Konayev Street
22 November	09:00	Kostanai	Zhastar Saraiy, conference hall	56 Yubileiny Microdistrict
24 November	11:00	Pavlodar	Nurtau Hotel, conference hall	168 Satpayev Street

CEO of JSC NC “KazMunayGas” Holds Press Conference on Company’s IPO activities

Wed, 16 Nov 2022 04:26:52 +0500

On 16 November, Astana hosted a press conference on the IPO of JSC NC “KazMunayGas” (KMG) with Magzum Mirzagaliyev, Chairman of KMG’s Management Board, and Dauren Karabayev, Deputy Chairman of KMG’s Management Board for Economics and Finance.

At the briefing, the speakers made a presentation of the company’s stable financial position and strong business performance. They further focused on promising projects that would contribute to a significant increase in the company’s profitability in the future.

“Oil and gas condensate production by KazMunayGas in 2021 amounted to 21.7 million tonnes, and hydrocarbon processing — 18.9 million tonnes. The company’s consolidated assets are 32 billion US dollars, the share capital is over 19 billion US dollars as of 30 June 2022. The 1st half of 2022 shows that the company has net profit of 677 billion tenge (1,504 million US dollars), and free cash flow of 188 billion tenge (417 million US dollars),” M. Mirzagaliyev noted.

He emphasised that the stable financial performance made it possible for KazMunayGas to increase the dividend payments from 45 billion tenge in 2016 to 200 billion tenge in 2021.

KMG’s CEO further said that the company had a diversified portfolio of oil and gas assets (production, transportation, refining). At the same time, KazMunayGas has a set of unique projects that may contribute to the growth of the company’s value in the future. For example, the FGP/WPCP (Future Growth Project / Well-head Pressure Control Project) will increase production at the Tengiz field from the current 27 Mtpa to almost 40 Mtpa. Projects to increase production at Kashagan will also increase the company’s revenues.

Onshore and offshore geological exploration projects (Karaton-Sarkamys, Abai, Isatai, Zhenis, Al-Farabi and others) are being actively implemented together with international partners. Another important growth area of the company is petrochemistry: On 8 November, a one-of-a-kind polypropylene plant with an annual capacity of 500 thousand tonnes was launched. The company plans to build polyethylene and butadiene plants.

KMG’s CEO expressed confidence that the company would take a worthy place in the investment portfolio of domestic retail investors.

“The start of the IPO marks a new stage in the development of our company. We aim to ensure that the IPO gives all Kazakhstan residents an opportunity to purchase KazMunayGas’ shares, and we will do our best to make our company appealing to investors and take a worthy place in their investment portfolio,” M. Mirzagaliyev said.

On 7 November 2022, Samruk-Kazyna JSC announced its intention to make the initial public offering for up to 30,505,974 shares of JSC NC “KazMunayGas”, which make up to 5% of KMG’s total outstanding shares.

Implementation of the Joint Kazakh-Russian Project “Production of Butadiene and Its Derivatives”

Tue, 15 Nov 2022 04:28:44 +0500

On 2–3 November 2022, as part of the Production of Butadiene and Its Derivatives project, early construction and installation operations began at the site of the future Plant.

Let us recall that, in November 2021 JSC NC “KazMunayGas” and Tatneft PJSC set up a joint venture — Butadien LLP — to produce butadiene rubbers, with the construction to be completed in 2025. It is planned to manufacture five different types of products: styrene-butadiene-styrene (rubber used for road surfaces, in the production of glue, plastics, etc.), divinyl-styrene synthetic rubber (rubber used in the tire industry, part of which is to be supplied to the tire plant in Karaganda region), butadiene (used for the production of synthetic rubbers), isobutane-isobutylene fraction (intended for the production of methyl tert-butyl ether, butyl rubber, isoprene and alkylate), methyl tert-butyl ether (additive increasing the octane number of gasoline).

Engineering works are underway, technology licensors have been involved in the Project.

It should also be noted that on 5 November 2022, Butadien LLP and Tengizchevroil LLP entered into a Butane Purchase and Sale Agreement for further development of the Project.

According to the signed document, Tengizchevroil will supply raw materials to the Plant. The annual supplies will amount to 380,000 tonnes of butane.

The Production of Butadiene and Its Derivatives project is being implemented as part of the National Project “Sustainable Economic Growth Aimed at Improving the Welfare of Kazakhstan People” approved by Decree No. 730 of the RoK Government dated 12 October 2021.

The Project is located in the Petrochemical Special Economic Zone in Kazakhstan at the Karabatan site, 43 km from the city of Atyrau.

The Project will create more than 2,000 jobs during construction and 700 jobs (highly qualified professionals) during operation.

KazMunayGas Roadshow Schedule for 16–19 November

Tue, 15 Nov 2022 04:27:23 +0500

Meetings with retail investors will be held from 14 to 24 November in 17 regional centres and cities of republican significance: Almaty, Astana, Shymkent, Atyrau, Turkestan, Karaganda, Aktobe, Zhezkazgan, Kokshetau, Konayev, Petropavlovsk, Taldykorgan, Taraz, Ust-Kamenogorsk, Uralsk, Semey, Aktau, Kyzylorda, Kostanai and Pavlodar.

Schedule of meetings with retail investors at the KazMunayGas roadshow

(Stay tuned to KMG’s website for updates)

Date	Time	City/Town	Venue	Address
16 November	11:00	Aktobe	Dastan Hotel, large conference hall	2 Bogenbai Batyr Street
	11:00	Zhezkazgan	Baikonur Hotel, conference hall	29A Yessenberlin Street
	10:00	Kokshetau	Central Office of Halyk Bank of Kazakhstan, conference hall on the 4th floor	33 N. Nazarbayev Street
17 November	11:00	Konayev	Secondary School No. 3, assembly hall (separate entrance)	Microdistrict 2
17 November	09:00	Petropavlovsk	GreenWich Hotel, small hall	1a Kazakhstan Constitution Street
18 November	10:00	Taraz	Arai Plaza Hotel, small conference hall	93a Tole bi Street
	11:00	Taldykorgan	Aiser Hotel, conference hall	128/130 Akyn Sara Street
	10:00	Ust-Kamenogorsk	Dademan Oskemen Tavros Hotel	11/1 Permitin Street
19 November	15:00	Uralsk	Park Hotel Uralsk	Samal 3 Microdistrict
19 November	10:00	Semey	Semey Hotel	26 Kabanbai Batyr Street

For more information, please visit our website: http://www.kmg.kz

Call-centre for KMG IPO issues (calls are free for landlines and mobiles, daily from 10:00 to 19:00)

8 (800) 004 03 15

NC KazMunayGas JSC Roadshow Schedule for November 14-15

Fri, 11 Nov 2022 08:17:09 +0500

NC KazMunayGas JSC (hereinafter – KMG) announces the upcoming meetings with retail investors on November 14-15 as part of the roadshow organized by the company for the detailed and extensive coverage of the local IPO of KMG on the Astana International Financial Center Exchange (hereinafter - Astana International Exchange or AIX) and the Kazakhstan Stock Exchange (KASE). Speakers at the meetings will include representatives of Samruk-Kazyna JSC, KMG, and financial advisors of the company.

During the roadshow, the public of the Republic of Kazakhstan will be provided with detailed information on KMG's activities, investment highlights and the company's dividend policy, as well as the terms of the IPO of shares and the procedure for submitting investor applications.

Meetings with retail investors will be held from November 14 to November 25 in the 17 administrative centers of oblasts and the cities of national significance, namely: Almaty, Astana, Shymkent, Atyrau, Turkestan, Karaganda, Aktobe, Zhezkazgan, Kokshetau, Konaev, Petropavlovsk, Taldykorgan, Taraz, Ust-Kamenogorsk, Uralsk, Semey, Aktau, Kyzylorda, Kostanay, and Pavlodar.

Schedule of the meetings with retail investors

as part of the roadshow of NC KazMunayGas JSC

on November 14-15

(information on other cities will be published later)

Date	Time	City	Venue	Address
November 14	14:00	Shymkent	Rixos Khadisha Hotel, Nazarbayev Hall	17, Zheltoksan Street
November 14	19:00	Almaty	Kazakhstan Hotel, Altyn Emel Hall	52/2 Dostyk Avenue
November 15	9:00	Karaganda	Cosmonaut Hotel, Large Conference Hall	162a, Amanzholov Street
	11:00	Turkestan	Uly Dala Eli Museum	1/2, Zholbaryskhan Street
	11:00	Astana	Hilton Garden Inn Hotel	15, Kabanbai Batyr Avenue
	19:00	Atyrau	Beluga Hotel, Beluga Conference Hall	111b, Baktygerei Kulmanov Street

More detailed information is available on the website: http://www.kmg.kz

KMG IPO Call Center (toll-free from landline and mobile numbers, every day from 10:00 to 19:00)

8 (800) 004 03 15

Applications Are Now Open to Subscribe to IPO Shares Offered by JSC NC “KazMunayGas”

Thu, 10 Nov 2022 04:55:16 +0500

On 9 November 2022, the trading systems of the Kazakhstan Stock Exchange and Astana International Financial Centre Exchange began accepting applications for subscription to the common IPO shares offered by JSC NC “KazMunayGas” (KMG). Applications will close on 30 November 2022 at 18:00, Astana time, for institutional investors and on 2 December 2022 at 15:00, Astana time, for retail investors.

The joint coordinators and book-runners of KMG's IPO, namely BCC Invest JSC, Freedom Finance JSC, Halyk Finance JSC and SkyBridge Invest JSC, have published analytical reviews of KMG’s IPO:

Freedom Finance JSC: KazMunayGas: Oil Rent Income for Kazakhstan Citizens

BCC Invest JSC: JSC NC “KazMunayGas” (KMG): Capitalisation on Raw Material Potential

Halyk Finance JSC: JSC NC "KazMunayGas": Recommendation to Buy

SkyBridge Invest JSC: KMG’s IPO: The Story Unfolds

Let us recall that on 7 November 2022, Samruk-Kazyna JSC (the Fund) and KMG announced their intention to make the initial public offering, thereby the Fund intends to offer for sale up to 30,505,974 shares, which amounts to 5 % of the total number of allotted shares (up to 610,119,493 shares).

The price per share is 8,406 tenge.

Gas Chemical Cluster to Accelerate Kazakhstan's Economic Progress

Wed, 09 Nov 2022 04:58:04 +0500

The plant operated by Kazakhstan Petrochemical Industries Inc LLP (KPI) in Atyrau, a subsidiary of JSC NC “KazMunayGas” (KMG), was launched on 8 November with the participation of RoK President Kassym-Jomart Tokayev and is becoming one of the major players in the global polypropylene production market.

In his speech at the plant launch ceremony, Magzum Mirzagaliyev, Chairman of KMG's Management Board, noted the strategic importance of the Gas Chemical Complex for Kazakhstan’s economy as a whole.

“The project is aimed at diversifying Kazakhstan's economy and moving away from the export focused on raw materials, which is directly affected by the petrochemical industry. The Gas Chemical Cluster currently created here and the range of basic polymer raw materials to be produced not only helps to eliminate the existing dependence on import, but also serves as an actual driver for the development of domestic business further down the end product chain,” said the Head of KMG.

KPI, which specialises in processing propane from the Tengiz Field, is designed to synthesise 500,000 tonnes of high-quality polypropylene (up to 64 grades) per year.

“By producing around 1 % of the world's polypropylene output, our plant will fully cover the domestic demand for polypropylene in Kazakhstan and give an impetus for the further development of polypropylene product manufacturers in various sectors of the national economy,” Daniyar Tiyessov, Chairman of KPI Inc’s Management Board, also confirmed in his speech.

The Head of KPI noted that polypropylene is a basic raw material not only for mechanical engineering, medicine and electrical engineering, but also for the production of packaging materials, containers, fibres, pipes, office equipment, garden and office furniture, as well as construction, textile and food processing industries.

The plant will initially produce 11 most popular polypropylene grades. This range will meet the requirements of both Kazakhstan processors and those operating at export markets. The product quality is verified by SGS, an internationally renowned Swiss company, which already operates its laboratory at the plant site.

The complex is extremely environmentally friendly and meets the strictest environmental safety standards. The propane fed to the plant from Tengiz is already free of harmful substances. In addition, KPI has a closed water supply cycle, and no harmful by-products are generated by the propane dehydrogenation reaction.

Propane dehydrogenation using a chromium-aluminium catalyst is based on the Catofin technology, while further polymerisation of the resulting propylene into polypropylene is based on the Novolen technology. Both processes were developed by Lummus Technology (USA) and are used in reactors manufactured by Wooyang HC (South Korea). One reactor alone (and there are eight of them!) is 15 meters long, 6 metres in diameter and weighs 145 tonnes.

China National Chemical Engineering Co. is the general contractor under this project. Forty-three Kazakhstan companies participated in the plant construction (with over 4,000 jobs created), and the project itself was implemented using the most advanced technologies, with 77 per cent of the equipment supplied by companies from Europe, USA, South Korea and Japan. These are world-leading companies in various industries and include Siemens, SGS, MAN, Mitsubishi, ABB, Zeeco and others.

President Launches Gas Chemical Complex in Atyrau Region

Tue, 08 Nov 2022 05:01:35 +0500

Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, told the Head of State about the prospects of the Gas Chemical Complex. A total of 4,300 people were involved in the construction of the complex. 631 people will have permanent jobs once the plant is in operation.

The plant, which specialises in processing raw products from the Tengiz Field, is designed to produce 500,000 tonnes of polypropylene per year, which corresponds to 1 % of its global production.

The production complex will not only meet the demand for polypropylene in the domestic market, but will also facilitate the operation of small and medium-sized manufacturers of polypropylene products for the construction, medical, automotive and food industries.

The plant uses the Catofin and Novolen technologies developed by Lummus Technology Inc (USA). Similar facilities operate only in five countries in the world, namely Saudi Arabia, USA, Belgium, South Korea and China.

NC KazMunayGas JSC IPO terms announced

Mon, 07 Nov 2022 16:31:38 +0500

IT IS NOT INTENDED FOR PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, AS WELL AS IN ANY OTHER JURISDICTIONS WHERE IT WOULD BE ILLEGAL.

With the exception mentioned below concerning Kazakhstan, this announcement is published in connection with an offer in accordance with the Prospectus Rules of the Astana International Financial Center Exchange (hereinafter – the AIX), and not a prospectus, an offer for sale or a solicitation for an offer to purchase or a recommendation to sell or buy securities in any jurisdictions, including the United States, Australia, Canada, Japan or the Republic of South Africa. This announcement is not intended for use as an advertisement on the territory of the Republic of Kazakhstan and for purposes of the legislation of the Republic of Kazakhstan.

In the United Kingdom, this announcement is being distributed and is directed only at “qualified investors” within the meaning of Article 2(e) of the Prospectus Regulation (Regulation (EU) 2017/1129) (hereinafter – Prospectus Regulation) as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 who also: (i) have professional experience in matters relating to investments and who fall within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (hereinafter – Order); or (ii) are high net worth entities falling within Article 49(2)(a) to (d) of the Order, or (iii) persons to whom it may otherwise be lawfully be communicated (all such persons together being referred to as the Relevant Persons). This announcement must not be acted on or relied on by persons who are not the Relevant Persons. Any investment or investment activity to which this announcement relates is available only to the Relevant Persons and will be engaged in only with the Relevant Persons. Persons distributing this announcement must satisfy themselves that it is lawful to do so. The securities will be available only to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be only with, Relevant Persons.

With respect to member states of the European Union, this announcement is directed only at, and the securities referred to herein will be offered only to, qualified investors within the meaning of Article 2(e) of the Prospectus Regulation, (such persons being referred to as the Qualified Investors) and/or in other circumstances falling within Article 1 section 4 of the Prospectus Regulation. Any such Qualified Investor will also be deemed to have represented and agreed that any such securities acquired by it in the offering have not been acquired on behalf of persons other than such Qualified Investors.

Neither this announcement nor any of its provisions form the basis for offers or obligations of any kind in any jurisdiction, and they should not be relied upon in connection with offers or obligations in any jurisdiction. Investors should not subscribe to or purchase any securities referred to in this announcement, other than based on the information contained in the prospectus, in its final form, (hereinafter - the Prospectus) prepared by Joint Stock Company “National Company KazMunayGas (hereinafter – KMG) regarding the potential admission of ordinary shares to the official list of AIX securities and their admission to official trading on the main market of AIX with the “KMG” trading symbol. On 7 November 2022, the AIX approved the Prospectus. The Prospectus was prepared in English, and KMG arranged for its translation into Kazakh and Russian. The translation of the Prospectus into Kazakh and Russian and/or other languages was not verified or approved by the AIX. If in doubt, you should rely on the version of the Prospectus in English. The Prospectus in English, Kazakh and Russian will be made available for inspection on the KMG website at the link: http://www.kmg.kz and the website of JSC Sovereign Wealth Fund “Samruk-Kazyna” (hereinafter – Samruk-Kazyna) at the link: http://www.sk.kz.

November 7, 2022

JSC “Sovereign Wealth Fund “Samruk-Kazyna”

JSC “National “Company KazMunayGas”

Joint Stock Company “Sovereign Wealth Fund “Samruk-Kazyna” (hereinafter – the Fund) today confirmed its intention to carry out an initial public offering, during which the Fund will sell up to 30,505,974 ordinary shares (hereinafter – Shares) of Joint Stock Company “National Company “KazMunayGas” (hereinafter – KMG), the national oil and gas company out of 551,698,745 Shares owned by the Fund (hereinafter - the IPO or Offer).

KMG confirms its intention to apply for the admission of Shares into the official list of securities of the Astana International Stock Exchange (hereinafter – the AIX) – the stock exchange of the Astana International Financial Center (hereinafter – the AIFC) and the admission to trading on AIX.

Mr. Almassadam Satkaliyev, Chief Executive Officer of Samruk-Kazyna JSC:

“As part of the Offer, Fund, which owns 90.42% of the issued and outstanding Shares, intends to offer up to 30,505,974 Shares for sale, which represents approximately up to 5% of the total number of Shares. The rest of the Shares are currently owned by the National Bank of Kazakhstan.

Thus, as a result of the IPO, the Fund will continue owning at least 85% of the Shares.

The price per Share under the Offer is KZT 8,406, assuming capitalisation of about KZT 5.1 trillion.

Acceptance of investor applications will begin on November 9, 2022, and will be closed for institutional investors on November 30, 2022, and for retail investors – on December 2, 2022.”

Mr. Magzum Mirzagaliyev, Chief Executive Officer of JSC NC KazMunayGas:

KMG is the leading oil and gas company and the largest of the national companies in Kazakhstan, manages assets across the entire production cycle – from exploration and production of hydrocarbons to transportation, processing and rendering services, and participates in the development and implementation of state policy in the oil and gas industry. The Company has more than 25% share in the production of oil and gas condensate in the country, 56% in transportation and 82% in oil refining. Our consolidated assets exceeded KZT 15 trillion. This year marks the 20th anniversary of the establishment of KMG. Yet even today, the Company meets the highest standards of corporate governance and transparency, is widely known in the international and Kazakhstani securities markets through the issuance of its Eurobonds, has international credit ratings from all three leading international rating agencies, two of which are investment grade.

The decision of the Government and the Fund to sell a portion of the KMG Shares on the free market will permit potential investors purchasing shares of the company, will contribute to the development of the securities market and stock exchanges in Kazakhstan. At the same time, let me note that the state will retain control over the company through the Fund.

On our behalf, we will make every effort to make KMG attractive to our investors and take its worthy place in their investment portfolios.”

Confirmation of key aspects of the planned Offer

The planned KMG IPO is carried out as part of the implementation of the Comprehensive Privatization Plan for 2021-2025, approved by the Government of the Republic of Kazakhstan.
The Fund intends to offer Shares to Kazakhstani and international retail and institutional investors on Kazakhstani platforms of the AIX and the Kazakhstan Stock Exchange (hereinafter - KASE) in accordance with the rules and regulations of the AIX and the KASE.
Currently, the Fund owns 90.42% of all issued and outstanding ordinary Shares. As part of the Offer, the Fund intends to offer up to 30,505,974 Shares for sale, which represents up to 5% of the total number of issued and placed Shares (in the amount of 610,119,493 pcs). Following the Offer, the Fund will own at least 85% of the total Shares.
KMG does not plan to sell (place) Shares as part of the Offer and will not receive any proceeds from the Fund’s sale of Shares as a result of the IPO.
The price per Share for the purposes of the Offer is KZT 8,406, assuming a capitalization of KZT 5.1 trillion.
Admission of Shares to the official list of the AIX with the “KMG” trading symbol is expected on December 7, 2022, and the admission to trading on the AIX is expected on December 8, 2022.
KMG ordinary shares are already included in the official list of the KASE with “KMGZ” trading symbol.
Current shareholders of KMG, the Fund and the National Bank of Kazakhstan, will not be allowed during a 180-day lock-up period to sell or otherwise alienate Shares with certain generally accepted exceptions in each case.
Acceptance of investor applications will begin on November 9, 2022, at 12:00 (Astana time) and will end for institutional investors on November 30, 2022, at 06:00 pm (Astana time), and for retail investors – on December 2, 2022, at 03:00 pm (Astana time).
The roadshow with participation of the representatives of KMG and the Fund is planned to start on November 9, 2022, or in the time nearest to this date.
BCC Invest JSC, Freedom Broker JSC, Halyk Finance JSC and SkyBridge Invest JSC are joint coordinators and bookrunners of the Offer.
For purposes of the Offer, KMG prepared a Prospectus in English, which was approved by the AIX on November 7, 2022. KMG arranged for the translation of the Prospectus into Kazakh and Russian. The translation of the Prospectus into Kazakh and Russian and/or other languages was not verified or approved by the AIX. If in doubt, you should rely on the version of the Prospectus in English. The Prospectus in English, Kazakh and Russian will be made available for review inspection on the KMG website at the link: http://www.kmg.kz and the website of JSC Sovereign Wealth Fund “Samruk-Kazyna” at the link: http://www.sk.kz.

Brief overview of the Company

KMG is a national leader in the oil industry with full integration at all stages of the value chain and provides a unique opportunity to invest in Kazakhstani oil and gas industry, which, according to the Fund and KMG, has fundamental prerequisites for long-term growth.
The mission of KMG is the development of natural resources in an effective and rational manner to ensure energy security, development and prosperity of Kazakhstan with care for future generations.
KMG strives to achieve continuous growth and strengthen its position as a leading vertically integrated oil and gas company that meets high safety standards and principles of sustainable development, focused on maximizing financial results.
An important contribution to the company’s future growth will be made through the implementation of megaprojects, including the completion of the Future Expansion Project and the Wellhead Pressure Management Project at the Tengiz field in 2023-2024, as well as further production expansion at the Kashagan and Karachaganak fields.
As a national company, KMG has unique subsoil use rights in relation to strategic subsoil deposits and offshore projects on the territory of Kazakhstan and has significant prospects in the field of geological exploration.
The potential volume of reserves growth according to the Development Strategy amounts to about 1.9 billion barrel of oil equivalent.
Sustainalytics, the international rating agency, rated KMG’s ESG risk management at 28.5 points, which underlines KMG’s strong position in managing ESG risks in the international oil and gas market.
KMG holds a leading position in the oil transportation sector, having participated in all significant oil transportation projects in Kazakhstan.
The company’s asset composition includes fully modernized four largest oil refineries in Kazakhstan and two refineries in Romania.

A brief overview of the last company’s production and financial indicators

90.42% of Shares are owned by the Fund, with the remaining 9.58% of Shares owned by the National Bank of the Republic of Kazakhstan. The Government of the Republic of Kazakhstan is the sole shareholder of the Fund.
The total amount of consolidated assets for H1 2022 increased from KZT 13.7 trillion to KZT 15.2 trillion.
In H1 2022, the revenue increased by 57.3% and amounted to KZT 4,203 billion (USD 9,339 million) compared to KZT 2,672 billion (USD 6,299 million) in H1 2021.
EBITDA increased by 49.2% and amounted to KZT 1,119 billion (USD 2,486 million) compared to KZT 750 billion (USD 1,767 million) in H1 2021.
The adjusted EBITDA indicator increased by 22.4% and for M6 2022 has amounted to KZT 598 billion compared to KZT 489 billion for the same period last year;
Net income for the H1 2022 increased by 5.0% compared to the same period of the last year and amounted to KZT 677 billion (USD 1,504 million).
Net income adjusted for the share in jointly controlled enterprises and associates amounted to KZT 156 billion (USD 348 million) compared to KZT 384 billion (USD 904 million) in H1 2021.
Free cash flow amounted to KZT 188 billion (USD 417 million) compared to KZT 291 billion (USD 685 million) for H1 2021.
As of June 30, 2022, the total debt amounted to KZT 3,935 billion (USD 8,366 million) compared to the indicator as of December 31, 2021, in the amount of KZT 3,746 billion (USD 8,676 million).
As of June 30, 2022, net debt amounted to KZT 2,292 billion (USD 4,872 million) compared to the indicator as of December 31, 2021, at the level of KZT 2,204 billion (USD 5,104 million).
The volume of oil and gas condensate production for H1 2022 amounted to 10,774 thousand tonnes, 0.3% increase compared to the same period last year.
The volume of oil transportation increased by 0.6% compared to M6 2021, amounting to 37,157 thousand tonnes.
The volume of hydrocarbon processing at Kazakhstani and Romanian refineries cumulatively increased by 0.2% and amounted to 9,721 thousand tonnes.

(Note regarding the correlation between KZT and USD: the exchange rate used herein was not universal for all the figures, but different in each case as applicable for the respective date.)

For more information, please contact:

Press Service of JSC Samruk-Kazyna

Telephone: +7 (7172) 55 26 90
Email: press@sk.kz

Press Service of JSC NC KazMunayGas

Telephone: +7 (7172) 78 62 31, 78 91 49
Email: press@kmg.kz

IPO hotline (toll-free from landline and mobile numbers)

Telephone: 8 (800) 004 03 15

e-mail: ipo@kmg.kz

Investor Relations Department

Telephone: +7 7172 78 63 43

e-mail: ir@kmg.kz

A copy of this announcement will be posted on the Internet at: http://www.kmg.kz

About JSC National Company KazMunayGas (hereinafter – KMG)

KMG is the leading vertically integrated oil and gas company in Kazakhstan. KMG manages assets across the entire production cycle – from exploration and production of hydrocarbons to transportation, processing and rendering specialized services, and participates in the development and implementation of state policy in the oil and gas industry. The company was founded in 2002. The main assets of KMG include: Exploration & Production: Ozenmunaigas (OMG) – 100%, Embamunaigas (EMG) – 100%, Kazakhturkmunai (KTM) – 100%, KazMunaiTeniz – 100%, Urikhtau (UO) – 100%, Mangistaumunaigas (MMG) – 50%, Kazgermunai (KGM) – 50%, Karazhanbasmunai (KBM) – 50%, Kazakhoil Aktobe (KOA) – 50%, PetroKazakhstan Inc (PKI) – 33%, Tengizchevroil (Tengiz) – 20%, Karachaganak - 10%, Kashagan - 16.88%. Transportation: KazTransOil – 90%, Kazakhstan-China Pipeline (KCP) – 50%, MunaiTas – 51%, Batumi Oil Terminal – 100%, Caspian Pipeline Consortium (CPC) – 20.75%, Kazmortransflot – 100%. Processing and other: Pavlodar Oil Chemistry Refinery – 100%, Atyrau Refinery – 99.53%, PKOP – 49.72%, KMG International – 100%, Petromidia - 54.63%, Vega – 54.63%, KazRosGaz – 50%, Kazakhstan Petrochemicals Industries Inc. - 49.5%.

More detailed information is available on the website: http://www.kmg.kz

IMPORTANT NOTICE

The information contained in this announcement is for background purposes only and does not purport to be full or complete, nor does it constitute or form part (in whole or in part) of any invitation or inducement to engage in investment activity, nor does it constitute an offer or invitation to buy any securities, in any jurisdiction including the United States, or a recommendation in respect of buying, holding or selling any securities. No reliance may be placed by any person for any purpose on the information contained in this announcement or its accuracy, fairness or completeness. The contents of this announcement are not to be construed as legal, financial or tax advice.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America, Australia, Canada, Japan, the Republic of South Africa or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement is not an offer for sale of any securities in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933 (the “U.S. Securities Act”). KMG has not registered and does not intend to register any portion of any potential offering of Shares in the United States or to conduct a public offering of any securities in the United States.

The Shares referred to in this document may only be offered or and sold in the Republic of Kazakhstan, including in or from the AIFC, in compliance with the applicable laws of the Republic of Kazakhstan and the AIFC rules and regulations. This Prospectus does not constitute an offer, or an invitation to make offers, to sell, purchase, exchange or otherwise transfer securities in Kazakhstan to or for the benefit of any Kazakhstan person or entity, except for those persons or entities that are capable to do so under the legislation of the Republic of Kazakhstan and any other laws applicable to such capacity of such persons or entities.

This announcement is not and shall not be construed as an advertisement (i.e. information intended for an unlimited group of persons which is distributed and placed in any form and aimed to create or maintain interest in KMG and its merchandise, trademarks, works, services and/or its securities and promote their sales) in, and for the purpose of the laws of Kazakhstan, unless such advertisement is in full compliance with Kazakhstan laws.

None of JSC “Halyk Finance”, JSC “Freedom Finance”, JSC “SkyBridge Invest” and JSC “BCC Invest”, (together, the “Bookrunners”) nor any of their respective affiliates, their respective directors, officers or employees, advisers, agents or any other person accepts any responsibility or liability whatsoever for the contents of, or makes any representations or warranties, express or implied, as to the accuracy, fairness or completeness of the information presented or contained in this announcement (or whether any information has been omitted from this announcement) or any other information relating to KMG, its subsidiaries and their associated companies (the “Group”), whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith. Accordingly, each of the Bookrunners and their respective affiliates, their respective directors, officers or employees, and any other person acting on their behalf expressly disclaims, to the fullest extent possible, any and all liability whatsoever for any loss howsoever arising from, or in reliance upon, the whole or any part of the contents of this announcement, whether in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.

Certain statements in this announcement are not historical facts and are “forward-looking” within the meaning of Section 27A of the U.S. Securities Act and Section 21E of the U.S. Securities Exchange Act of 1934. Forward-looking statements include statements concerning our plans, expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, our competitive strengths and weaknesses, plans or goals relating to development projects, financial position and future operations and development, our business strategy and the trends we anticipate in the industries and the political and legal environment in which we operate and other information that is not historical information. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved. Given these risks and uncertainties, be cautioned not to place undue reliance on such forward-looking statements. The Bookrunners do not intend and do not assume any obligation to update any forward-looking statement contained herein.

In addition, this announcement contains information concerning the Group’s industry and its market and business segments generally, which is forward-looking in nature and is based on a variety of assumptions regarding the ways in which the industry, and the Group’s market and business segments, will develop. These assumptions are based on information currently available to KMG. If any one or more of these assumptions turn out to be incorrect, actual market results may differ from those predicted. While KMG does not know what effect any such differences may have on the Group’s business, if there are such differences, they could have a material adverse effect on the Group’s future results of operations and financial condition.

The information in this announcement is subject to change. Before subscribing for or purchasing any Shares, persons viewing this announcement should ensure that they fully understand and accept the risks set out in the Prospectus. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. Neither this announcement, nor anything contained in the Prospectus referred to herein, shall form the basis of or constitute any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any Shares or any other securities nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefor.

The Fund may decide not to go ahead with the IPO and there is therefore no guarantee the Offering will be made or that all or any portion of the investor applications will be satisfied. Financial decisions should not be based on this announcement. Acquiring investments to which this announcement relates may expose an investor to a significant risk of losing all or a portion of the amount invested.

Persons considering making investments should consult a professional person specialising in advising on such investments. Neither this announcement, nor the Prospectus referred to herein, constitutes a recommendation concerning a possible Offer. The value of Shares can decrease as well as increase. Potential investors should consult a professional advisor as to the suitability of the Offer for them and their purposes.

Chairman of KMG's Management Board Gets Progress Updates on Water Projects

Fri, 04 Nov 2022 05:06:11 +0500

On 4 November, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG), got progress updates on KMG's water management projects during his business trip to Mangistau and Atyrau Regions.

Mirzagaliyev visited Water Pumping Station No. 5 of the Astrakhan – Mangyshlak Main Water Pipeline in Atyrau Region. This water pipeline is currently the only centralised water supply source for consumers in Kurmangazy, Issatai and Zhylyoi Districts of Atyrau Region, as well as for the town of Zhanaozen, Beineu, Mangistau, Karakiya and Tupkaragan Districts of Mangistau Region.

Talgat Kurmanbayev, General Director of KazTransOil JSC, reported to M. Mirzagaliyev on the progress under the Astrakhan – Mangyshlak Main Water Pipeline Upgrade and Expansion Project (Tranche 1). According to T. Kurmanbayev, the main pipeline’s degree of wear is currently about 90 % and its maximum capacity is 110,000 cubic metres per day. The upgrade project will increase the main pipeline’s capacity to 170,000-200,000 cubic metres per day. The implementation period is 2022 to 2023.

“The main pipeline upgrade project, which is currently in progress pursuant to the direct instruction of the Head of State, is of utmost social importance. KazMunayGas has made all necessary decisions to start the project. Now we have to do our best to complete it as soon as possible to ensure water security for the local community in the region,” M. Mirzagaliyev said.

In Mangistau Region, M. Mirzagaliyev visited the Desalination Plant (DP) at the Karazhanbas Field, which was put into test operation on 1 July this year. The plant currently produces 7,000 to 8,000 cubic metres of treated water per day. According to Kuanyshbai Nurgaliyev, First Deputy General Director of Karazhanbasmunai JSC, to date more than 950,000 cubic metres of drinking water supplied via the Astrakhan – Mangyshlak Main Water Pipeline have already been released to the population of Mangistau Region. The DP is expected to reach its full production capacity of 17,000 cubic metres (this is the volume of treated water produced from 42,500 cubic metres of groundwater per day) by the end of 2022.

During his visit, M. Mirzagaliyev instructed the management team of Karazhanbasmunai JSC to ensure stable operation of the desalination plant to achieve its design capacity, and to accelerate the remaining construction and installation operations and the development of as-built technical documentation.

Both water projects are implemented pursuant to the instructions by Kazakhstan's President Kassym-Jomart Tokayev to address the drinking water shortages in the western regions.

At the end of his business trip, M. Mirzagaliyev arrived at the Caspi Bitum Refinery in Aktau. Talgat Mukanov, General Director of JV Caspi Bitum LLP, updated the Head of KMG on the production performance indicators and the status of preparations for the planned preventive maintenance of the refinery scheduled for December this year. Caspi Bitum is ahead of its production schedule after 10 months of 2022 and is expected to meet its production target by the end of the year.

M. Mirzagaliyev Gets Progress Updates on Kashagan Field Repairs

Sat, 29 Oct 2022 05:09:04 +0500

On 28 October, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, visited the Kashagan Field, where he got progress updates on the repairs at Bolashak OPF.

Olivier Lazare, Managing Director of North Caspian Operating Company (NCOC), reported on the current status of repairs at Bolashak Onshore Processing Facility’s Slug Catcher.

During his visit to the facilities, M. Mirzagaliyev noted the need to complete the repairs as soon as possible.

All mechanical repairs to restore production levels have been completed now and the facility is expected to be started up within a few days.

Earlier on 2 September, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC "KazMunayGas”, visited the production facilities of the North Caspian Project during his business trip to Atyrau Region. During that trip, the Head of KMG reviewed the inspection programme aimed at identifying the reasons for the issues at the facility.

Let us recall that Bolashak Onshore Processing Facility at Kashagan was shut down on 3 August due to the detected signs of a gas leak. Production was partially resumed up to 100,000 bpd on 9 August and up to 210,000 bpd on 30 September.

JSC NC KazMunayGas announces its operating results for the nine months of 2022

Thu, 27 Oct 2022 09:22:05 +0500

Joint-stock (JSC) National Company (NC) KazMunayGas (“KMG” or “Company”), Kazakhstan's national vertically integrated oil and gas company, announces its operating results for the nine months of 2022.

Highlights for the nine months of 2022 compared to the same period of the last year:

Oil and gas condensate production increased by 0.9% and amounted to 16,060 tonnes;
Oil transportation amounted to 55,085 thous. tonnes compared to 55,727 thous. tonnes in the same period last year;
Hydrocarbons refining volumes at the Kazakh and Romanian refineries increased by 5.8% and amounted to 14,896 thous. tonnes.

	9M 2022 (net to KMG)	9M 2021 (net to KMG)	%
Oil production, thous. tonnes	16,060	15,923	+0.9%
Gas production, mln m³	5,942	5,860	+1.4%
Oil transportation, thous. tonnes	55,085	55,727	-1.2%
Oil refining, thous. tonnes	14,896	14,083	+5.8%

Operating results are represented in accordance with KMG's ownership interest in joint ventures and associates and 100% of results for consolidated subsidiaries, unless otherwise stated.

Upstream

Oil and gas condensate production volume for the nine months of 2022 amounted to 16,060 thous. tonnes (441 kbopd) representing an increase by 0.9% compared to the same period of previous year. Production volume of natural and associated gas raised by 1.4% to 5,942 mln m³.

Oil and condensate production, thous. tonnes	9M 2022 (net to KMG)	9M 2021 (net to KMG)	%
OMG	3,805	3,988	-4.6%
MMG	2,258	2,192	+3.0%
EMG	1,921	1,855	+3.5%
Tengiz	4,302	3,786	+13.6%
Kashagan	734	952	-22.9%
Karachaganak	768	768	0.0%
Others	2,273	2,382	-4.6%
Total	16,060	15,923	+0.9%

Oil production at Tengiz increased significantly by 13.6% and amounted to 4,302 thous. tonnes (126 kbopd). Associated gas production also increased significantly by 18.8%, amounting to 2 394 mln m³. The increase in production was due to removal of restrictions under the OPEC+ agreement.

Oil production at Kashagan decreased to 734 thous. tonnes (21 kbopd) due to complete shutdown of production facilities at the offshore and onshore complexes for repair and restoration work after the discovery of a gas leak in August this year. Associated gas production decreased and amounted to 451 mln m³.

Oil and condensate production at Karachaganak did not change and amounted to 768 thous. tonnes (22 kbopd). Gas production increased by 5.3% and amounted to 1,479 mln m³. The increase in gas production was due to the commissioning of the 4th gas re-injection compressor and an increase in volume of gas processing.

The volume of oil and condensate production at operating assets decreased by 1.5% to 10,256 thous. tonnes (272 kbopd). The decline in oil and condensate production in the nine months of this year was due to emergency power outages by the utility company serving Ozenmunaigas, and a natural drop in production levels at some mature fields. At the same time, the decrease in oil production at operating assets was partially offset by an increase in production of 3.5% at Embamunaigas and 3.0% at Mangystaumunaigas. Gas production decreased to 1,618 million m³ mainly due to the transfer of JSC KazTransGas (JSC NC QazaqGaz) to JSC “Samruk- Kazyna” in November 2021, which includes the gas production asset Amangeldy Gas.

Midstream

The volume of oil trunk pipelines and sea transportation in the nine months of 2022 decreased by 1.2% and amounted to 55,085 thous. tonnes compared to the same period of the last year.

Oil transportation¹, thous. tonnes	9М 2022 (100%)	9М 2022 (net to KMG)	9М 2021 (net to KMG)	%
KazTransOIl	30,003	30,003	30,824	-2.7%
Kazakhstan-China Pipeline	14,258	7,129	6,515	+9.4%
MunaiTas²	4,052	2,067	1,554	+33.0%
Caspian Pipeline Consortium	43,349	8,995	9,109	-1.3%
Kazmortansflot	6,892	6,892	7,726	-10.8%
Total	-	55,085	55,727	-1.2%
1 Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation. 2 MunaiTas is an equity-consolidated joint venture and transportation volumes are quoted at a 51% ownership interest.

The volume of oil transportation through trunk pipelines slightly increased by 0.4% and amounted to 48,193 thous. tonnes. There was a change in the volume of oil transportation by directions, namely in the growth of pipelines volumes in the direction of Kazakhstan’s refineries to ensure the production of required oil products volumes in the domestic market. At the same time, export volumes of oil transportation through KazTransOil decreased due to natural decline in oil production at mature fields and also due to the oil redistribution by shippers to the domestic market and to the pipeline of the Caspian Pipeline Consortium.

Compared to the same period last year, the total volume of oil transportation by sea decreased by 10.8% to 6,892 thous. tonnes, mainly affected by lower oil transportation volumes in Mediterranean Sea due to the growth of oil supply to the domestic market, which thereby decreased export volumes by Kazakh oil shippers.

Trading

Sales volumes of KMG's own produced oil and gas condensate for the nine months of 2022 increased by 1.1% and amounted to 16,318 thous. tonnes, of which 60.5% was exported.

Supplies of own produced oil and gas condensate volumes to the domestic market amounted to 6,439 thous. tonnes, including deliveries of crude oil from operating assets (Ozenmunaigas, Embamunaigas, Kazakhturkmunai and Urikhtau Operating) in the amount of 3,740 thous. tonnes to Atyrau, Shymkent and Pavlodar refineries for further oil refining and sales of oil products.

Downstream

Hydrocarbon refining, thous. tonnes	9M 2022 (net to KMG)	9M 2021 (net to KMG)	%
Atyrau refinery	4,167	4,007	+4.0%
Pavlodar refinery	3,970	4,321	-8.1%
Shymkent refinery¹	2,315	1,829	+26.5%
Caspi Bitum¹	361	373	-3.2%
Petromidia	3,817	3,326	+14.7%
Vega	268	227	+18.2%
Total	14,896	14,083	+5.8%
[1] Shymkent refinery and Caspi Bitum processing volumes are indicated at a share of 50%

For the nine months of 2022, the total volume of hydrocarbon processing increased by 5.8% compared to the same period in 2021 and amounted to 14,896 thous. tonnes:

At Kazakhstani refineries, the volume of hydrocarbon processing increased by 2.7% and amounted to 10,812 thous. tonnes. The increase in refining volumes was due to the stable operation of Shymkent refinery this year and the reduced refining volumes last year due to the shutdown of production for a scheduled overhaul;
The volume of refining at the KMG International refineries (Petromidia, Vega) in Romania increased by 15.0% and amounted to 4,085 thous tonnes. The increase in refining volumes was due to the shutdown of the Petromidia plant for repairs in July-August 2021 after the incident with the diesel hydrotreaters.

For the nine months of 2022 the volume of production of oil products at Kazakh and Romanian refineries increased by 6.1% and amounted to 13,797 thous. tonnes:

Kazakhstani refineries produced 9,798 thous. tonnes of oil products, which is higher by 2.4% year-on-year, mainly due to Shymkent refinery volumes. At the same time, the production of oil products at the Pavlodar refinery was lower by 7.2% in the current year due to a corresponding decrease in refining volumes;
Refineries of KMG International (Petromidia, Vega) produced 4,000 thous. tonnes of oil products, which is 16.5% higher than in the nine months of 2021 due to a corresponding increase in refining volumes at the Petromidia refinery in Romania.

KazMunayGas improves ESG culture among employees of subsidiaries

Wed, 26 Oct 2022 05:43:40 +0500

In Autumn 2022, JSC NC “KazMunayGas” conducted a series of training workshops for employees of its subsidiaries and dependent entities (SDE).

In September in Aktau, experts from PWC Kazakhstan, together with KMG's Headquarters, conducted a training workshop on sustainable development disclosure for employees of SDEs in charge of HSE, economics and human resource management.

During the training, more than a hundred employees of SDEs were introduced to global trends in sustainable development, UN Sustainable Development Goals and the impact of ESG ratings on KMG's business. In addition to theoretical training, participants also learned how to apply international GRI (Global Reporting Initiative) sustainability standards in practice.

In October, dedicated training in sustainable project management based on the Green Project Management Global methodology was also held in Astana for project managers of 7 major SDEs.

Training participants learned best practices in applying sustainable development to projects, programmes and portfolios, and mastered practical tools to assess and mitigate risks and improve project success rate. Based on test results, five project managers in SDEs will be GPM-b-certified in sustainability focused project management.

KMG is committed to developing its employees in sustainability. Commitment to ESG principles is evidenced by the company's high rating.

In September this year, Sustainalytics [1] rated KMG's ESG risk management at 28.5. In a benchmark rating, KMG was rated in the top 20 among 250 global oil and gas companies by Sustainalytics. To see detailed information about Sustainalytics rating, please follow the link.

[1] Sustainalytics is an independent ESG and corporate governance research, ratings and analysis firm that helps investors around the world develop and implement responsible investment strategies.

KazMunayGas opens new Control and Analysis Centre

Sat, 22 Oct 2022 05:48:36 +0500

On 22 October, a new Control and Analysis Centre (CAC) was opened in the building of JSC NC “KazMunayGas”.

The new CAC features a single digital platform to cover the full upstream-midstream-downstream cycle. CAC can monitor, control, analyse, store, collect and process data in all areas of KMG's business.

“Today we have launched a new Control and Analysis Centre, which provides real-time access to information from a single centre. Ultimately, this will allow us to further improve the efficiency of KMG's asset management by increasing the quality and transparency of real-time information,” said Magzum Mirzagaliyev, Chairman of KMG's Management Board.

In addition, CAC analytical system is integrated with the enterprise management information system at Pavlodar and Atyrau Refineries to enable online process monitoring of equipment status, supervisory control and material balance of products.

KMG's employees receive state awards

Sat, 22 Oct 2022 05:47:30 +0500

A number of KMG's employees were honoured with state and industry awards at a ceremony dedicated to Republic of Kazakhstan Day, which was celebrated on 22 October in KMG's office in Astana.

Magzum Mirzagaliyev, Chairman of KMG's Management Board, congratulated the employees on the occasion, recalling that the Declaration on the State Sovereignty of the Kazakh Soviet Socialist Republic approved on 25 October 1990 was the legal beginning of Kazakhstan's movement towards true independence.

“Every citizen of the country has made a contribution to Kazakhstan's achievements during the years of independence. The country's economy has grown rapidly, largely thanks to its workers. It was their work that contributed to building a strong state. Patriotism is service for the benefit of your country, and oilmen are true patriots, for they work selflessly in any weather, whether it is cold or hot!” Mr. Mirzagaliyev said in his welcoming speech.

He stressed that the year was full of memorable events - Embamunaigas, the oldest company in the country's oil industry, celebrated its 100th anniversary and KazMunayGas celebrated its 20th anniversary.

The Head of KMG awarded Medals for Meritorious Service to Seytkassym Ospanov (Mechanic at Kaztransoil), Rakhimzhan Zhangabylov (Chief Engineer of Atyrau Refinery), Nagima Madibekova (KMG's Chief Specialist) and Bolat Begzhanov (Director of Ozenmunaigas Vehicle Department).

The winners of the Annual Best in Occupation Contest among KazMunayGas Group, the final round of which took place in Kyzylorda on 3-6 October 2022, were awarded Yzdik Maman medals. Other distinguished workers were awarded certificates of merit.

During the Republic Day celebrations, the staff were shown a video about the Best in Occupation Contest, and a concert featuring professional singers and dancers.

Head of KazMunayGas meets with executives of several companies in Seoul

Fri, 21 Oct 2022 05:49:49 +0500

Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG), met with the management of DAELIM and Samsung Engineering in Seoul between 18 and 20 October.

During the meeting, the parties discussed cooperation in the petrochemical sector, including KMG's polypropylene and polyethylene projects.

“We commend DAELIM for its success in the oil and gas chemical industry with its significant polyethylene, polyisobutylene and biaxial-oriented polypropylene film production capacity, and as the leading EPC Company in South Korea, Asia and the Middle East. I would like to note that the Head of State Kassym-Jomart Kemelevich Tokayev pays special attention to development of the petrochemical industry. Systematic state support measures are currently provided to projects in this area in our country,” Mr. Mirzagaliyev emphasized during the meeting with DAELIM's management.

During the meeting with the management of Samsung Engineering, the Head of KMG highlighted its success as an international leading EPC Company providing a full range of engineering services, including feasibility studies, design, procurement, turnkey construction of industrial facilities in the oil and gas, petrochemical and other industries.

During the trip, Mr. Mirzagaliyev also visited DAELIM's production facilities and petrochemical complexes in Korea.

For reference:

Daelim (Daelim Industrial Co.) is a leading EPC Company in South Korea, Asia and the Middle East, comprising gas, oil refining, chemical and petrochemical industries, power plants, industrial and residential construction.

Samsung Engineering is a construction and project management (EPC&PM) company providing a full range of engineering services, including feasibility studies, design, procurement, construction and commissioning. It cooperates with major state-owned oil companies: Saudi Aramco (Saudi Arabia), ADNOC (UAE) and Sonatrach (Algeria). It has built the world's largest gas separation plant in Thailand and is building gas complexes in Saudi Arabia.

KMG increases its carbon capture and storage capabilities

Thu, 20 Oct 2022 05:15:39 +0500

On October 18 – 20 Chevron and JSC NC KazMunayGas had a joint workshop on carbon capture, utilization, and storage (CCUS) in Astana.

The workshop was arranged under the Memorandum of Understanding signed between KMG and Chevron in June 2022 to explore potential lower carbon opportunities in Kazakhstan.

At the workshop, Chevron subject matter experts shared their experience on carbon capture and storage projects and talked about the technologies applied.

KMG presented their preliminary screening results of potential candidates for pilot CCUS projects.

«Considering that our company is exploring opportunities for carbon capture and storage projects as part of its energy transition, Chevron’s CCUS experience is very valuable at this stage», said Dastan Abdulgafarov, Deputy Chairman of the Management Board for Strategy, Investments and Business Development.

KMG attendees included experts from the corporate center and KMG upstream and downstream subsidiaries.

KMG and Chevron also discussed potential opportunities for joint carbon capture and storage projects.

Collaboration between Chevron and KMG is part of the efforts from both companies to support Kazakhstan’s target vision to achieve net zero by 2060.

The Public Council of Samruk-Kazyna to Discuss Preparation for KazMunayGas IPO

Mon, 10 Oct 2022 11:01:10 +0500

As part of the awareness-raising work on the IPO program of JSC NC KazMunayGas, the Public Council of Samruk-Kazyna JSC has held an open meeting with the participation of external experts, heads of exchanges (KASE, AIFC, AIX), representatives of the public, associations of financiers and minority shareholders, investment bankers, economists, as well as the media.

The main Agenda item is the JSC NC KazMunayGas IPO: prerequisites and status of preparation. Yernar Zhanadil, Managing Director for Development and Privatization of the Fund has been the reporter. «Samruk-Kazyna is conducting a campaign of awareness-raising meetings with citizens across the country to clarify information about plans and approaches to transfer the assets of the Fund Group to the competitive environment, and in particular, the IPO of large national companies. In Q4 this year, it is planned to hold the IPO of KazMunayGas on local stock exchanges - AIX and KASE, within which priority will be presented, first of all, to citizens of Kazakhstan. The Fund is always ready for an open dialogue with the public on issues of privatization and IPO of large companies of the Fund,» - he said.

The management of JSC NC KazMunayGas provided information about the company’s current activities, key production and financial indicators and growth prospects. «On the eve of the IPO, KazMunayGas has updated its development strategy and strategic development plan until 2031. Among the growth points of the company, I would like to note the active work in geological exploration. We see prospects in the development of exploration projects both onshore and offshore. In addition, it is planned to increase oil production at our large projects in Kashagan and Tengiz. It is worth separately noting the development of petrochemistry: a polypropylene production plant is at the launch stage, active work is underway on polyethylene and butadiene projects,» - Dauren Karabayev, Deputy Chief Executive Officer for Economics and Finance of JSC NC KazMunaiGas said.

The meeting has been held in the format of an open dialogue. Each of those present could express their opinion about the IPO of KazMunayGas, as well as about the risks and opportunities of privatization in general. Members of the public were particularly interested in KMG’s development strategy in the coming years and plans for the future.

One of the topics of discussion is KMG’s plans to develop oil and gas chemistry in Kazakhstan. A number of experts believe that the company should focus on mining, not on processing raw materials. Dauren Karabayev has disagreed with this, noting that oil and gas processing will create added value of Kazakhstani hydrocarbons on the world market. Bolat Zhamishev is in sympathy with this. According to him, the development of oil and gas chemistry in Kazakhstan is one of the priorities outlined by the country’s leadership and the Head of State.

Following the meeting, the Chairman of the Public Council of Samruk-Kazyna JSC, Bolat Zhamishev, has stressed that the effectiveness of the information campaign should be assessed not by the number of people who came to the explanatory meetings, but by the number of open brokerage accounts.

He has drawn attention to the need to ensure the technical readiness of systems for accepting applications from citizens, including at peak times.

M. Mirzagaliyev, “Our Main Asset is People, Not Oil!”

Mon, 10 Oct 2022 10:57:05 +0500

On 7-8 October, the resort village of Zerenda, Akmola Oblast, hosted the meeting of Zhanaozen trade union leaders with JSC NC "KazMunayGas” (KMG) management.

During the two days of training sessions, the trade union leaders were able to communicate to KMG Management their vision of company problems and ways of future development, and propose their ideas on how to improve the social standing of the region. The exchange of ideas touched upon both process-related and non-process-related challenges, as well as how productivity can be raised.

“Our main asset is people, not oil. The Company commits to improve well-being, professional skills, knowledge, teambuilding and unity of our staff. We managed to meet and have a fair dialog by discussing openly the outstanding issues. Such informal meetings will be held on a regular basis,” noted the Chairman of KMG's Management Board Magzum Mirzagaliyev.

The Head of Ozenmunaigas (OMG) JSC’s Oil and Gas Production Department No. 1 Alibek Sarsenov showed an enormous appreciation for the ability to meet informally, as the trade union leaders could discuss a wide range of critical issues intimately with the KMG’s Head.

“Such informal communication in a friendly environment does bring people together. Thanks to warm ambience of the meeting with the KMG’s Top Management and representatives of Zhanaozen trade unions, we managed to find the common points and understanding on a whole lot of problems. The training event turned out to be quite valuable in terms of acquiring new skills to settle labour conflicts in an efficient manner,” emphasised A. Sarsenov.

Following the workshop, the trade union representatives visited the IQanat High School of Burabay residential school where Zhanaozen school students study. Owing to the OMG’s initiative supported by KMG and Samruk-Kazyna Trust Social Project Development Foundation, 50 tenth-year school students of Zhanaozen have started their new academic year in this residential school this year under the Zharkyn Bolashak program. The children were glad to meet their townsmen and shared their vivid impressions on how they study in one of country’s top-class school.

Among the attendees of the two-day event were OMG’s General Director Maksat Ibagarov, heads of servicing and producing departments, chairmen of trade unions and leaders of OMG’s trade union offices (counting 10 thousand members), KMG’s oilfield services companies, and the chairman of KazGPP LPP’s trade union.

Best in Job Contest Ends in Kyzylorda

Sat, 08 Oct 2022 10:51:59 +0500

On 6 October, the Kyzylorda Oblast Musical and Drama Theatre hosted the closing event of the Best in Job Contest among the trade workers of the KazMunayGas Group companies.

119 participants from 17 leading oil and gas companies in Atyrau Oblast, Mangistau Oblast, Aktobe Oblast, Pavlodar Oblast and Shymkent joined the contest in Kyzylorda to compete by their professional skills in the following jobs: oil and gas production operator, well survey operator, commodities operator, reservoir pressure maintenance operator, process equipment repairman, electric and gas welder, electrical fitter, chemical analysis laboratory assistant, process unit operator, compressor unit operator, workover crew, wireline crew.

The Contest included two stages: Stage I – assessment of theoretical knowledge by means of testing, Stage II – demonstration of practical exercises at Akshabulak and Nuraly fields.

Below listed are the names of Contest winners:

Best Oil and Gas Production Operator

1st place – Muratzhan Tenizbaiev, Karazhanbasmunai JSC

2nd place – Tungyshbai Amankos, Embamunaigas JSC

3rd place – Kuanysh Serikbaiev, Mangistaumunaigas JSC

Best Reservoir Pressure Maintenance Operator

1st place – Murat Baglanov, Kazgermunai JV LLP

2nd place – Ruslan Abdrakhmanov, Embamunaigas JSC

3rd place – Serikbol Aizharykov, Mangistaumunaigas JSC

Best Electric and Gas Welder

1st place – Nurbek Zheksenbaiev, KazTransOil JSC

2nd place – Adilbek Mukhambetkaliyev, Embamunaigas JSC

3rd place – Aidos Abdi, Oil Construction Company LLP

Best Process Equipment Repairman

1st place – Rysbek Sersengaliyev, KazTransOil JSC

2nd place – Abdol Bizhanov, Mangistaumunaigas JSC

3rd place – Aziz Tolybaiev, Karazhanbasmunai JSC

Best Commodities Operator

1st place – Shaiakhmet Zhetkizgen and Kudaibergen Arynov, KazTransOil JSC

2nd place – Venera Mavlaveyeva and Saltanat Ziganshina, Ozenmunaigas JSC

3rd place – Bakytzhan Nuradinov and Ruslan Zakiryaiev, Kazgermunai JV LLP

Best Well Survey Operator

1st place – Abylaikhan Zumagaziyev, Embamunaigas JSC

2nd place – Sergey Rassolenko, Kazgermunai JV LLP

3rd place – Askhat Kaziyev, Mangistaumunaigas JSC

Best Chemical Analysis Laboratory Assistant

1st place – Araigul Kemessai, KazTransOil JSC

2nd place – Kunsulu Kudaibergenova, Ozenmunaigas JSC

3rd place – divided by Laura Muratkyzy, Kazgermunai JV LLP, and Zulfia Zhazykbaieva, CASPI BITUM JV LLP

Best Electrical Fitter

1st place – Syrym Izgaliyev, Karazhanbasmunai JSC

2nd place – Yerzhan Zhussipov, Kazgermunai JV LLP

3rd place – Azat Shyntereyev, Embamunaigas JSC

Best Process Unit Operator

1st place – Rustam Assilov, Kazgermunai JV LLP

2nd place – Berikbolsyn Alibek, PetroKazakhstan Oil Products LLP

3rd place – Beksultan Duissengul, Atyrau Refinery LLP

Best Compressor Unit Operator

1st place – Bakbergen Maidabekov, Kazgermunai JV LLP

2nd place – Rinat Bekkairov, Atyrau Refinery LLP

3rd place – Bauyrzhan Iskakov, Pavlodar Refinery LLP

Best Turner

1st place – Nazar Balgabaiev, Karazhanbasmunai JSC

2nd place – Baizhan Daulov, Ozenmunaigas JSC

3rd place – Rakhat Iman, Mangistaumunaigas JSC

Best Workover Crew

1st place – Rassul Amaniyazov, Baltabek Keben, Nurlybek Gabdullin, Agabek Khassymbaiev, Yergeissin Kaipin, Karazhanbasmunai JSC

2nd place – Yesset Tazhmagambetov, Kuanysh Madenov, Berdibek Bissembaiev, Nurzhau Zholdybaiev, Alym Bimagambetov, Ozenmunaigas JSC

3rd place – Amanbek Saparbaiev, Yerkin Seitkaliyev, Abylash Munalbaiev, Yermek Yelubaiev, Zhaiyk Akbolatov, Oil Services Company LLP

Best Wireline Crew

1st place – Alibek Myrzagaliyev, Anes Mukhanbetov, Uteuli Alagezov, Turlan Melekeyev, Embamunaigas JSC

2nd place – Maksat Aidarkhanov, Zulkarnai Myrzabekov, Nurlybek Naukebaiev, Makhset Yesbagambetov, Ozenmunaigas JSC

3rd place – Smadiyar Tuleubaiev, Arman Shupashev, Assylbek Alshynbai, Kuantkan Baikabylov, Karazhanbasmunai JSC

KazMunayGas’ Staff Drill Their Emergency Actions at an Oil Asset in Western Kazakhstan

Fri, 07 Oct 2022 10:49:53 +0500

The table top exercises were conducted at the head oil pump station (HOPS) Aktau of the KazTransOil’s Mangistau Oil Pipeline Department.

The drills were attended by the specialists of Samruk-Kazyna, KazMunayGas, KazTransOil, Kazakhstan Temir Zholy, RoK Ministry of Energy and EMERCOM, as well as by medical and emergency rescue crew members. They worked on their actions plan and coordination of emergency response and mitigation efforts.

According to the script, an HOPS oil tank caught fire followed by an explosion and partial tank destruction. The incident involved a victim. The emergency was immediately reported to the company management, local governmental authorities and EMERCOM, and then escalated to response departments of KazTransOil, KazMunayGas, and Samruk-Kazyna.

The fire was fought jointly by the fire crews of KazTransOil and JV Caspi Bitum from Aktau, as well as by a Kazakhstan Temir Zholy’s fire engine train.

In a matter of minutes, the HOPS employees shut down the pump, closed oil pipeline valves and evacuated to a safe distance. KMG and KazTransOil deployed crisis management teams (CMT). The event helped refine interdepartmental interfaces and coordination at all the tiers.

In 2023, Samruk-Kazyna will cascade the lessons learned and KazMunayGas’ crisis management team practices to other Foundation Group’s companies.

Chairman of KMG's Management Board M. Mirzagaliyev Meets the Romanian Minister of Energy V. Popescu

Fri, 07 Oct 2022 10:48:09 +0500

Chairman of KMG's Management Board Magzum Mirzagaliyev met the Romanian Minister of Energy Virgil-Daniel Popescu.

The negotiations were held in the Astana Office of JSC NC "KazMunayGas". The parties discussed cooperation in the areas of oil refining and petroleum production, provision of KMG’s oil refineries in Romania with oil resources, as well as future development of KMG International’s assets, including in the framework of decarbonisation initiatives.

Head of KMG assured the Romanian Minister of their intention to continue oil supplies to the Petromidia Oil Refinery as usual.

“This year, it is the 15th anniversary of Rompetrol Group (note: now KMG International) acquisition by KazMunayGas. So far, this acquisition and further investments in Rompetrol growth constitute our largest investments abroad. We follow closely how Rompetrol business grows and consider it a strategic asset,” said M. Mirzagaliyev during the meeting.

The Romanian Minister of Energy V. Popescu visited the capital of Kazakhstan on 6-7 October in the framework of the Sixteenth Meeting of the Kazakh-Romanian Intergovernmental Commission for Commercial, Scientific and Research Cooperation.

Reference:

KMG International N. V. (KMG’s 100% owned affiliate) owns Romania’s largest and one of the most state-of-art oil refinery around the Black Sea region – Petromidia Oil Refinery (54.63%) and the only producer of extraction naphtha in Central and Eastern Europe – Vega Refinery (54.63%). The design capacity of Petromidia Oil Refinery is 6.0 MTPA. The design capacity of Vega refinery is 0.5 MTPA.

KMG International Group also engages in oil and oil products sales transactions around the Black Sea and the Mediterranean Sea and operates over fuel filling stations and oil product outlets in European states (Romania, Moldova, Bulgaria, Georgia) under Rompetrol brand.

KazMunayGas Maintains Stable Medium Level of ESG Risk Ratings

Thu, 06 Oct 2022 15:18:25 +0500

Sustainalytics agency has conducted an end-to-end performance study of JSC NC “KazMunayGas” (KMG, the Company) in the sphere of environment, social policy and corporate Governance (ESG).

The rating agency has given KMG’s ESG risk management a score of 28.5. The Company is exposed to a medium risk of material effect from ESG factors. In the comparative rating, KMG has ranked 18th among 250 global oil-and-gas companies, rated by Sustainalytics. Detailed information on Sustainalytics’ rating is available at link.

We have maintained the rating level, despite the realized health and safety risks. КМГ obtained a high expert rating for the community outreach in the regions of presence, tax payment transparency, and commitment to conservation of environment and biodiversity. Furthermore, the report by Sustainalytics’ experts highly rated the corporate governance in KMG group and highlighted its commitment to high business ethics standards.

Being the national operator, representing the state in the RoK's oil and gas sector, KMG will continue the efforts to improve its operations to meet the highest sustainable development standards. The Company will direct its efforts to the avoidance and prevention of industrial accidents, consistent reduction in the greenhouse gas emissions, improvement of the social and environmental performance in the regions of presence.

In order to raise the transparency of the ESG disclosures, KMG has been publishing on an annual basis since 2012 the sustainability reporting according to the GRI Standards.

Head of KazMunayGas Meets the Trade Union Leaders

Tue, 04 Oct 2022 10:47:10 +0500

On 4 October 2022, the Chairman of the JSC NC "KazMunayGas” (KMG) Management Board Magzum Mirzagaliyev met the leaders of Mangistaumunaigas (MMG) JSC’s trade unions in Astana.

The event was attended by the Deputy Chairman of KMG's Management Board for Exploration and Production K. Iskaziyev, MMG's General Director D. Khassanov, Head of Public Association Local Trade Union of MMG’s employees M. Kentanov, Head of Public Association Local Trade Union of MMG’s PU Zhetybaimunaigas employees B. Kulmurynov, and Head of Public Association Local Trade Union of MMG’s PU Kalamkasmunaigas employees B. Kuatbai.

During the meeting, M. Mirzagaliyev informed the heads of trade unions on the steps that KMG takes to implement the production programs and maintain social stability among workforce.

The attendees discussed the questions that are most frequently asked by the staff, including, but not limited to operational, HR and social issues.

More than 100 Meetings Held in Country Regions under the Samruk-Kazyna Foundation’s Privatisation Program

Tue, 04 Oct 2022 10:45:00 +0500

On 3 October 2022, the representatives of Samruk-Kazyna JSC, Kazakh broker and dealer organisations, and stock exchanges AIX and KASE held in Atyrau an awareness-raising workshop on the privatisation program for JSC NC "KazMunayGas” personnel.

It is to note that the event was conducted in the framework of Samruk-Kazyna Foundation’s IPO awareness-raising campaign for communities of all regions of Kazakhstan. The campaign started on 16 September and embraced more than 60 cities all over the country. The closing events are to be held in Astana and Almaty.

Experts informed the participants on the status of the Samruk-Kazyna Foundation’s privatisation program and IPO’s of portfolio companies, on what benefits IPO would bring to Kazakhstan citizens, how many shares an investor could buy, how the profit could be made, which risk a shareholder would face, and many other things.

“All the investors have to place a special emphasis on performance and financial indicators of each company, understand and analyse them carefully. It is worth noting that free cash flow is a vital indicator of the company’s capability to make optional payments. For example, to invest into new projects, repay a debt before the due date or pay dividends to shareholders. It is to emphasise that dividends on a share are paid based on the company’s financial standing,” noted Ainur Alipbaieva, the Head of Corporate Finances in JSC NC "KazMunayGas".

For further information on IPO and Foundation’s privatisation program as a whole, please visit the dedicated web site ipo.sk.kz.

Finals of the Uzdik Maman 2022 Contest Start in Kyzylorda

Mon, 03 Oct 2022 10:40:09 +0500

On 3 to 6 October, Kazgermunai JV LLP will hold the finals of the Uzdik maman (Best in Job) Contest among the trade workers of JSC NC "KazMunayGas” Group’s companies.

120 participants from 17 KMG Group’s companies in Atyrau Oblast, Mangistau Oblast, Aktobe Oblast, Pavlodar Oblast and Shymkent joined the contest in Kyzylorda. The participants who succeeded to reach the finals had won the elimination rounds in their respective companies.

The purpose of the contest is to promote trade occupations in the oil and gas industry, and raise the motivation of plant staff, their professional level and theoretical knowledge, as well as to introduce good practices and lean production methods.

The contest covers the following jobs: oil and gas production operator, well survey operator, commodities operator, reservoir pressure maintenance operator, process equipment repairman, electric and gas welder, electrical fitter, chemical analysis laboratory assistant, process unit operator, compressor unit operator, workover crew, wireline crew.

It includes two stages: Stage I – assessment of theoretical knowledge. Stage I will be conducted in the form of a computer-based test. Stage II – practical exercises at the Kazgermunai JV LLP’s base of Akshabulak and Nuraly fields in the Kyzylorda Oblast.

The participants will be evaluated by their theoretical knowledge, practical skills within the specified period of time, adherence to occupational health and safety rules, productivity, and application of advanced work methods and practices.

JSC NC "KazMunayGas” Group’s best in job professionals will be nominated in the coming days after the two stages.

Scheduled Maintenance of Process Units Starts at Atyrau Refinery – Refinery to Continue Generation of Oil Products

Sat, 01 Oct 2022 11:01:46 +0500

According to the approved preventive maintenance schedule issued by the RoK Ministry of Energy, the preventive maintenance campaign commenced at the Atyrau Refinery on 1 October 2022.

The process facility maintenance will be performed on a stage-by-stage basis. The Atyrau Refinery’s units operate according to the two-stream oil refining pattern and are shut down and started alternatively. Thus, the refinery will not be completely shut down. The refinery will continue to operate at the 50–70 % capacity during the maintenance, generating and shipping the target products.

In October to November, it is planned to refine 692,000 tonnes of oil. The average daily refining rate will be 11,347 tonnes, which corresponds to 68 % of the refinery’s design capacity. The average daily oil product generation volume will be as follows: 2,400 tonnes of motor gasoline per day, 2,600 tonnes of diesel fuel per day, 240 tonnes of jet fuel per day and 170 tonnes of liquefied gas per day.

The preventive maintenance at the Atyrau Refinery will be carried out according to the Industrial Safety Law On Civil Protection of the Republic of Kazakhstan to ensure safe and reliable operation of the process, power generation, compression and dynamic equipment so as to achieve the design performance, improve the environmental parameters and inspect the automation equipment.

The following works will be performed on the units during the scheduled maintenance: catalyst change-out, internal inspection, inspection and examination of reactors, tanks and vessels, columns, heat exchangers and pipelines.

The Atyrau Refinery’s ramp-up to stable operation is also scheduled on a stage-by-stage basis by the second ten-day period of November 2022.

As a reminder, the plant maintenance was previously expected to commence in September 2022. However, in order to stabilise the situation on the fuel and lubricants market, the maintenance was postponed to 1 October 2022.

Chairman of KMG’s Management Board Participates in KIOGE Conference

Wed, 28 Sep 2022 10:55:19 +0500

Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, participated in the Plenary Session entitled Oil and Gas Industry Development in the Republic of Kazakhstan: New Scenarios at the Kazakhstan International Oil and Gas Exhibition and Conference — KIOGE-2022.

The Conference is taking place on 28–29 September in Almaty.

During the questions and answers session, Mr. Mirzagaliyev gave a detailed account of KMG’s Low Carbon Development Programme aimed at reducing the carbon footprint by 1.6 million tonnes of CO₂ by 2031 as compared to 2019.

“Similarly to many other oil companies, our Plan comprises the actions to improve our operational and energy efficiency, introduce renewable energy sources and implement the offset policy,” said the Chairman of the Management Board.

However, the Head of the Company emphasised that KMG would not give up its core business.

“According to the International Energy Agency, despite the declining oil consumption, oil will remain the principal energy source in the world at least up to 2040. Moreover, experts expect the demand for petrochemicals to grow twofold in the nearest 20 to 30 years. Over the last 10 years, this demand increased by 50 %. Besides, the demand will also grow in the construction and agricultural sectors: the oil consumption in these sectors will increase by 46 % by 2050 with the similar population growth rate,” added Mr. Mirzagaliyev.

The Head of KMG summarised his address by advising that the company plans to extend its asset portfolio by including petrochemicals, maintain its production levels and diversify the transportation routes. Apart from that, actions will be taken to reduce the carbon footprint and improve equipment reliability and energy efficiency.

The Chairman of the Management Board also visited the KIOGE Exhibition at the Atakent Kazakhstan Centre for Business Cooperation.

KazMunayGas presents the current investment projects and low carbon development projects to the KIOGE participants. A dedicated presentation is made to mark the 100th anniversary of Embamunaigas JSC.

As a reminder, Embamunaigas JSC celebrated its centennial anniversary in early September. The company’s history goes back to 1922, when Embaneft Trust was established to develop the Dossor and Makat fields. In 100 years, Emba’s oil workers produced more than 188 million tonnes of black gold.

Now, Embamunaigas is one of the largest production companies in JSC NC “KazMunayGas” Group.

KazMunayGas and Chevron Sign Agreement on Cooperation

Wed, 28 Sep 2022 10:47:44 +0500

On 28 September 2022 in Almaty during the KIOGE Conference, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, and Derek Magness, Managing Director of Chevron’s Eurasia Business Unit, signed an agreement on cooperation in the field of human capital development and knowledge exchange with Kazakhstan specialists.

The agreement envisages cooperation in terms of the career development and gaining the necessary experience by Kazakhstan’s oil and gas sector specialists. For instance, it is planned to arrange on-the-job training for employees of JSC NC “KazMunayGas” in a number of Chevron’s key business units.

“KazMunayGas and Chevron have developed a long-term fruitful cooperation. We participate in joint implementation of major oil and gas projects. Today, by signing the Agreement on Cooperation, our companies proceed to the next stage of their dynamic interaction in the area of training, experience exchange and career development of Kazakhstan specialists. I would like to express my gratitude to Chevron for its continued support to KazMunayGas. I am positive that our partnership will strengthen further, facilitating the development of the national energy sector and Kazakhstan’s economy as a whole,” noted Mr. Mirzagaliyev, Head of KMG.

“Chevron’s journey in Kazakhstan has always been based on trust, transparency and partnership. We are proud that our successful cooperation boosts the development of Kazakhstan’s economy, creates new jobs, supports businesses, strengthens communities and generates sustainable development opportunities,” emphasised Mr. Magness. “Starting from the earliest stages of cooperation, our aim has always been the continuous development of the Human Capital by investing into our most valuable asset, which is People. Our agreement with KMG reinforces our commitment to enhancing the opportunities for Kazakhstan specialists.”

President Visits Shymkent Refinery

Tue, 27 Sep 2022 03:47:57 +0500

During his visit to Shymkent, Kassym-Jomart Tokayev paid a visit to the Shymkent Refinery.

Yerbolat Kozhabayev, Director of PetroKazakhstan Oil Products LLP Managing Company, updated the President on the outcomes of the refinery upgrade. At the moment, the refinery’s design capacity has reached 6 million tonnes of oil per year. The refinery has started to produce motor fuel of K-4 and K-5 ecological classes.

During his conversation with the refinery’s personnel, the Head of State emphasised the strategic significance of the refinery.

“At present, the refinery’s products make up 40 per cent of the domestic market. The product quality has improved. Extensive efforts have been made. This has become possible thanks to your hard work,” said Mr. Tokayev.

Over the last three years, the production volumes have increased up to 2.1 million tonnes of gasoline, 340 thousand tonnes of kerosene-based jet fuel and 1.9 million tonnes of diesel fuel. All products are supplied to the domestic market.

Heads of KazMunayGas and EPAM Systems Hold Bilateral Negotiations

Tue, 20 Sep 2022 05:27:08 +0500

On 19 September 2022 in New York, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, held a meeting with Arkadiy Dobkin, President and Chairman of the Board of Directors of EPAM Systems.

During the meeting, the parties discussed the cooperation prospects in terms of developing advanced digital solutions for KazMunayGas Group.

Mr. Mirzagaliyev, Head of KMG, gave an account of the adopted digital technologies and the projects currently implemented by the company, and also emphasised the significance of bilateral cooperation in the field of digital development.

In his turn, Mr. Dobkin expressed his interest in implementation of joint projects with KMG and noted KazMunayGas’ high potential in terms of production digitalisation, including business process automation and optimisation.

EPAM is a leading global service provider engaged in software and complex digital platform development. The company’s revenue in 2021 was 3.7 billion U.S. dollars.

KMG exercised a call option to buyback 50% share in KMG Kashagan B.V. from JSC «Samruk-Kazyna»

Tue, 20 Sep 2022 05:15:37 +0500

On September 15, 2022, JSC NC «KazMunayGas» (the «KMG») used the right under the Share Option Agreement concluded in 2015 and acquired from JSC Samruk-Kazyna (the «Fund») a 50% share in KMG Kashagan B.V. for 3.8 billion US dollars, which owns 16.88% in the North Caspian Production Sharing Agreement (the Kashagan project).

«This acquisition is one of the largest transactions for KMG in recent years. As a result of the increase in the share in the Kashagan project, KMG's consolidated production, EBITDA, net profit and assets will improve. At the same time, the company's debt will also increase. It is planned that payment for the acquisition will be made at the expense of cash flows of KMG Kashagan B.V.» Deputy Chairman of the Management Board of KMG Dauren Karabayev said.

In 2015 KMG sold a 50% share in KMG Kashagan B.V. to the Fund in order to use the proceeds to reduce debt in order to prevent breach of the financial covenant «Net Debt / EBITDA <= 3.5x» in KMG Eurobonds due to a sharp drop in oil prices in those years.

The current buyback was preceded by work targeted to improve the financial stability of KMG, which made it possible to execute this transaction without pressure on credit ratings.

Measures to improve the financial stability during this period included negotiations with minority shareholders and consolidation of the share in JSC KazMunaiGas Exploration and Production, activity on optimizing the covenant package in KMG's public debt and building a long-term debt repayment schedule in accordance with KMG's cash flows. In particular, as a result of a series of transactions with KMG Eurobonds, the financial covenant «Net Debt / EBITDA <= 3.5x» was completely excluded from the covenant package.

As a result of the work carried out, the total debt of KMG according to the consolidated audited financial statements decreased from US$ 19.2 billion as of the end of 2014 to US$ 8.4 billion as of the end of the first half of 2022. Considering the acquisition of the share in KMG Kashagan B.V., the total debt of KMG immediately upon completion of the transaction will amount about 10.7 billion US dollars.

The improvement in KMG's financial standing was also noted by international rating agencies, which upgraded KMG's individual credit ratings during this period.

The 50% share in KMG Kashagan B.V was earlier subject to a prejudgment attachment, which was lifted by the court of appeal in The Hague, the Netherlands, this year. The subsequent appeal of this decision filed with the Netherlands Supreme Court, cannot affect the buyback of the 50% share by KMG, because the decision of the court of appeal to lift the attachment has immediate effect.

Further details of the transaction will be properly disclosed in KMG's financial statements.

International Experts Discuss Enhanced Oil Recovery Methods for Kazakh Mature Fields during the Astana forum

Mon, 19 Sep 2022 10:36:04 +0500

On 16-17 September, key oil & gas experts from all over the world held the international scientific and workshop conference entitled 'Prospects of Chemical Enhanced Oil Recovery (CEOR) Methods at the Late Stage of Development’ in Astana.

The event was attended by the Vice Minister of Energy of the Republic of Kazakhstan Askhat Khassenov, major oil producers and oilfield service companies from Kazakhstan and foreign countries, developers and producers of specialty chemicals and equipment for CEOR projects, representatives of research institutes and a number of universities. More than a hundred of forum attendees represented over 70 companies from all over the world.

The forum to discuss enhanced oil recovery methods for mature oil fields was organised by KMG Engineering LLP.

“Kazakhstan enhances oil production on a yearly basis. In the nearest future, we expect to produce as much as 100 million tonnes of hydrocarbons or even more. Mature fields in this country require a more efficient approach to development. Every fifth Kazakh field is at its later stage of reserves development, up to 70% or more demonstrate a high water cut of the production and degrading profile of residual recoverable reserves,” noted Vice Minister Askhat Khassenov during the conference.

The chemical methods are already proven to be efficient from the economic and technical perspectives. The Vice Minister stated that the dedicated ministry, being the regulator of the oil and gas industry, will furnish all possible assistance to extend the use of such methods in production.

According to the Chairman of KMG Engineering LPP's (KMGI) Management Board Bakhytzhan Khassanov, the Kazakh fields have been successfully employing polymer flooding since 2014 as a highly efficient chemical enhanced oil recovery method. Thus, the method is already at its commercial implementation stage at Kalamkas and Zaburunye fields. At the same time, the polymer flooding technology is under laboratory-based performance evaluation for Uzen field conditions, which requires implementation of advanced laboratory apparatus, and best international survey practices and methods.

There were workshops held between KMGI and Gazpromneft – Technology Partnerships LLC, and dedicated universities of Ufa and Kazan. The guests were presented with the overview of KMGI profile, made aware of the overall status of CEOR projects at KMG fields, including data on their efficiency, prospects and areas of improvement, and discussed the cooperation issues.

Terminated Attempt to Steal Diesel Fuel from the Atyrau Refinery

Fri, 16 Sep 2022 10:38:45 +0500

On 10 September 2022, the Atyrau Refinery Corporate Security Department terminated the attempt to carry petroleum products by car from the plant area.

The car was found to be driven by a driver of the transportation service provider. Upon the shift end, the driver attempted to bring about 5 cubic meters of undocumented diesel fuel outside the Atyrau Refinery LLP for further sales to individuals in Atyrau.

The records were filed to the Atyrau Police Department.

JSC NC "KazMunayGas” draws your attention to the fact that petroleum production and export issues are under Company management's constant monitoring.

Children of Zhanaozen Start Their Education under Zharkyn Bolashak Program

Fri, 16 Sep 2022 10:33:50 +0500

The Zharkyn Bolashak Program offers a possibility for talented children of Zhanaozen to study free of charge in vocational schools of the country.

Since early September, 149 school students started their education in 44 colleges in 11 cities of Kazakhstan. Among the key educational profiles, prevailing are polytechnical disciplines (19%), and professions in transport and telecommunications industries (18%), economics and technology (18%). Some chose academic (16%) and IT (14%) professions.

Other 28 young girls and boys went for other disciplines. Thus, 12 children were admitted to Republican colleges of arts, six chose Republican Olympic sports residential schools, and ten young Zhanaozen citizens were picked by the Republican Physics and Math School.

The Zharkyn Bolashak Program became possible owing to the initiative of Ozenmunaigas JSC, which was supported by JSC NC "KazMunayGas” and Samruk-Kazyna Trust Social Project Development Foundation.

The charity support covers the cost of education and living in hostels of such educational institutions. The children are provided with scholarship and financial assistance to buy seasonal clothes. During the adaptation period, the program participants are assisted by facilitators.

The purpose of the initiative is to support families from socially vulnerable communities, namely large and incomplete families, families with disabled persons, and children from foster families.

Let us recall that 50 tenth-year school students of Zhanaozen started their new academic year in the IQanat High School of Burabay residential school with the support of Samruk-Kazyna JSC.

Samruk-Kazyna Trust Social Project Development Foundation acts as the single operator of the Samruk-Kazyna JSC Group charity activities and adheres to the following priorities:

Assisting people in the social and healthcare sector
Developing media, cultural community and human potential, and investing into sustainable development of the community
Implementing regional social investment programs in the areas where the Group operates.

Management of JSC NC “KazMunayGas” and Samruk-Kazyna Holds Explanatory Meetings with the Expert Community

Tue, 13 Sep 2022 04:11:14 +0500

At the initiative of Samruk-Kazyna JSC and JSC NC “KazMunayGas” (KMG, Company), meetings with experts in the financial and oil and gas markets were held in Nur-Sultan and Almaty on 6 and 8 September 2022 to discuss KMG’s operating and financial performance, IPO plans and other relevant issues.

The experts were presented with the Company’s key results for the first half of this year and given the relevant explanations during the meeting. Free cash flow was KZT 188 billion ($417 million), down 35% versus the same period last year. However, if we exclude cash flows from KazTransGas JSC (NC QazaqGaz JSC) divested in November 2021, we see an 81% increase in free cash flow (up 71% in US dollars) versus H1 2021, rather than a decrease. Capital expenditures excluding KazTransGas JSC, calculated on a cash basis, increased by 35% to about KZT 166 billion ($370 million).

The participants also discussed approaches to the dividend policy. According to international practices, the basis for dividend payments is usually free cash flow, as this indicator objectively reflects actual cash inflows, as opposed to net income, which includes non-cash items due to specific accounting policies. In case of KMG, however, the ability to pay dividends is affected by the size of its debt and the scope of investment, which are generally greater than those of peers, its social commitments, financial strength and others.

During the discussion of dividends to be paid by KazTransOil JSC, the experts were explained that the decrease in cash flows, which are the basis for dividend payments, was mainly due to the decrease in transportation through the Atyrau–Samara oil pipeline due to the growing competition from alternative transportation routes (those outside the company’s operations), increase in OPEX and CAPEX, including payroll, etc. However, KazTransOil remains a strategic asset for KMG, and a buyback or delisting of the company’s shares is not an option.

The Company’s representatives also spoke about the main stages of preparation for IPO from obtaining the necessary approvals and changing the Eurobond covenant package to the liquidation of sub-holdings and immediate preparation for listing on stock exchanges. Key value drivers were mentioned during the meeting such as production growth at the major Tengiz and Kashagan Projects and associated increase in transportation through the Caspian Pipeline Consortium (CPC), the possibility of increasing reserves through exploration, development of high value-added petrochemical projects and others.

Key risk factors noted are the oil price, dependence of dividends on free cash flow, production risks and others. The experts also touched on the oil transportation through the CPC system. According to KMG, single-point mooring (SPM) 3 at CPC is running smoothly and generally meets shippers’ needs for oil transportation at the moment. Nevertheless, the development and management of transport routes, including alternative routes, is one of KMG’s priorities and is under constant scrutiny.

The most relevant list of risk factors will be given in the prospectus. However, the current Eurobond prospectuses also contain relevant information.

To conclude the discussion, participants touched on the mechanisms to protect minority shareholders’ rights and investment guidelines that retail investors should adhere to.

The shareholders’ rights under applicable RoK laws, the Company’s Charter, the commitment to high corporate governance standards(KMG has a corporate governance rating of BBB from PWC), and the role of non-executive directors are noted as protection mechanisms.

In terms of investment guidelines, the participants agreed that individuals should consider all possible risks and potential benefits when making a decision, not to purchase shares with borrowed funds, to build a diversified portfolio, to consider their financial situation and risk tolerance and more.

In conclusion, it was noted that detailed information on KMG’s performance could be found at www.kmg.kz in the Investors section, including, among other things, quarterly consolidated financial statements, operational performance, annual reports and other information.

Uzen Field Rehabilitation Discussed in Mangistau Region

Fri, 09 Sep 2022 04:12:47 +0500

On 9 September 2022, a meeting was held in Mangistau Region to discuss the rehabilitation of Uzen field. The meeting was attended by Mr. Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, Mr. Maksat Ibagarov, CEO of Ozenmunaigas JSC, Mr. Bakytzhan Khassanov, CEO of KMG Engineering LLP, veterans of the oil and gas industry, geologists, public figures and deputies of Zhanaozen.

Let us recall that at the meeting on the socio-economic development of Mangistau Region in September 2021, President Kassym-Jomart Tokayev instructed JSC NC “KazMunayGas” to develop a separate exploration plan for the region in connection with the depletion of oil fields and expected decline in oil production by 2030. Therefore, the Uzen and Karamandybas Field Rehabilitation Plan has been developed as instructed by the President.

Field rehabilitation activities are expected to increase oil production at Ozenmunaigas JSC in a phased manner over several years to 6–6.5 million tonnes and to maintain this figure over the next 10 years.

“I believe that the plan will make a significant contribution to the socio-economic stability of Zhanaozen,” Mr. Mirzagaliyev said. “Ozenmunaigas does not yet fully meet its oil production targets. Technical and geological problems make it increasingly difficult to maintain oil production at the same level.”

Despite the current level of annual capital investment, there has been a decline in production at OMG’s fields, the head of KMG said. This threatens to reduce the company’s revenues, which poses risks to social commitments to maintain the current number of employees and wages.

Mr. Mirzagaliyev said Ozenmunaigas would reach its economic production limit as early as 2024.

During his trip, Mr. Mirzagaliyev also met with trade union leaders from Mangistau Region. Participants discussed the most frequently asked questions from employees, which included wages and frequent power cuts in the field. The Chairman of the Management Board highlighted KMG’s projects for the development of Zhanaozen: upgrade and expansion of the Astrakhan–Mangyshlak main water pipeline, construction of a desalination plant in Kenderli and a new gas processing plant in Zhanaozen.

On the social side, the company is completing the construction of two sports complexes, has launched the Schoolchildren Centre Project and has made a decision to build 16 sports grounds in the city. The national company also finances the tuition and accommodation of talented Zhanaozen schoolchildren in the country’s best colleges and boarding schools under the Zharkyn Bolashak Programme.

President Kassym-Jomart Tokayev Receives Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”

Thu, 08 Sep 2022 04:19:05 +0500

The President was briefed on the measures taken by JSC NC “KazMunayGas” to stabilise the situation on the market of fuel and lubricants.

According to the company, a record 17 million tonnes of oil products will be processed in Kazakhstan this year.

A decision has been made to postpone scheduled maintenance of Shymkent and Atyrau Refineries, which will allow up to 150,000 tonnes of additional diesel fuel to be sent to the domestic market. In addition, up to 100,000 tonnes of diesel fuel will be imported in order to meet the needs of Kazakhstan Temir Joly.

Magzum Mirzagaliyev reported on KazMunayGas’ petrochemical projects. The polypropylene plant in Atyrau Region has now completed commissioning. The plant is expected to be up and running within a month. The President was also briefed on the implementation of the polyethylene and butadiene production projects.

Kassym-Jomart Tokayev was briefed on the current situation at the Caspian Pipeline Consortium marine terminal. Oil loading into tankers is stable and shipments are on schedule.

At the end of the meeting, the President gave several instructions concerning the implementation of investment projects.

People Are KazMunayGas’ Highest Value

Thu, 08 Sep 2022 04:18:18 +0500

The seventh annual Health, Safety and Environment Forum of JSC NC “KazMunayGas” (KMG) CEOs was held in the capital on 8 September. The forum was devoted to “Occupational Health and Safety Leadership. New Challenges and Approaches” and initiated by KMG’s Safety and Environment Functional Unit. Members of the Board of Directors and management of Samruk-Kazyna and KMG, CEOs of more than 30 subsidiaries and dependent entities (SDE), representatives of government authorities and a number of KMG’s foreign partners were invited to the forum.

When welcoming the forum participants, Mr. Magzum Mirzagaliyev, Chairman of KMG’s Management Board, stressed that people were the company’s highest value.

“For two years, we spent much of our time and resources to combat the pandemic, but today we need to focus as much as possible on employee safety. People are the highest value for KazMunayGas and our main goal is to keep all employees alive and healthy. Strict adherence to labour discipline and occupational safety culture must be the top priority for all of KMG’s employees,” said the head of the company.

However, he was critical of the fact that there are still SDEs where the accident rate does not decrease year on year. In this regard, the head of KMG reminded that the top priority for managers was to ensure the safety of employees and reduce the accident rate.

“You should always lead by example and demonstrate your commitment to safety, and demand the same from your employees,” Mr. Mirzagaliyev said.

The head of KMG stressed that the occupational safety and environmental objectives were closely linked to KMG’s updated 2031 Development Strategy. Environmental priorities include management of air emissions and reduction of raw gas flaring, water management, production waste management, land reclamation and biodiversity conservation.

Christopher John Walton, Chairman of KMG’s Board of Directors, also noted in his speech the crucial importance of personal example and the management’s attitude towards the goal of zero injuries and accidents at work.

The report by Kairat Saktaganov, Director of KMG’s HSE Department, summarised the results of 2021 and the first 7 months of this year, named the group’s successful and underperforming companies, and showed KMG’s corporate HSE Performance Wheel model, which compactly and visually presented 12 areas that SDEs should work on systematically to achieve zero incidents.

SDEs’ CEOs were presented with the international Vision Zero Concept through the introduction of the 5Z culture based on Five Zeros: zero accidents, disease, pollution, harassment, unawareness.

Mr. Olivier Lazare, Managing Director of North Caspian Operating Company (NCOC), explained how NCOC’s process safety management system works. Stephen Conner, General Operations Manager of Tengizchevroil LLP, shared his experience in implementing the HOP (Human & Organisational Performance) system, which helps prevent accidents more effectively. Zhazira Zhanadilova, Expert from PricewaterhouseCoopers, introduced the forum participants to global sustainable development trends and the international Net Zero Strategy. In addition, a number of topical issues were discussed during panel sessions with the CEOs of SDEs.

At the HSE awards ceremony, it was stated that all forum participants were united by the common goal of creating a systematic corporate safety culture. Awardees: Atyrau Refinery LLP (for effective implementation of corporate safety and health initiatives), Embamunaigas JSC (for successful implementation of the road safety project), Karazhanbasmunai JSC (for contribution to environmental protection), KazTransOil JSC (for effective implementation of best practices in emergency and crisis management), JV Caspi Bitum LLP (for HSE leadership and commitment) and Mangistauenergomunai LLP (for effective implementation of industrial safety tools).

CPC Oil Shipments Are Stable

Wed, 07 Sep 2022 04:23:00 +0500

JSC NC “KazMunayGas” reports stable oil shipments at the marine terminal of Caspian Pipeline Consortium.

Let us recall that on 5 and 17 August, Single-Point Moorings (SPM) 1 and 2 were taken out of service due to a crack found in the buoyancy tank support area. Subsequently, the cargo handling system of SPM 1 was flushed. Tanker search is ongoing to flush the cargo handling system of SPM 2.

In addition, the buoyancy tank of SPM 3 was inspected under water with no defects detected. Oil loading into tankers from SPM 3 is currently stable and shipments are on schedule.

Please also note that CPC is negotiating with potential companies capable of providing the necessary technology to replace the buoyancy tank. The time when SPM 1 and SPM 2 return back in service will be determined following competitive procedures and contract award to a future contractor.

Head of KazMunayGas Talks about Performance of Three Refineries and Production of Oil Products

Mon, 05 Sep 2022 05:25:11 +0500

Today at a press conference at the Central Communications Service under the President of the Republic of Kazakhstan, Bolat Akchulakov, Minister of Energy, and Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, spoke about measures being taken to stabilise the situation on the fuel and lubricants market.

Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG), spoke about the performance of three refineries, production and consumption of oil products.

“Following the revamp, the combined capacity of three refineries has increased by 3 million tonnes to 17.2 million tonnes per year. In more detail, the production capacity of gasoline has increased 70 % from 2.9 million to 5.1 million tonnes, diesel fuel 30 % from 4 million to 5.2 million tonnes, and jet fuel more than doubled from 0.3 million to 0.67 million tonnes,” the Head of KMG said.

It is worth noting that the production and consumption of fuels and lubricants has also increased over the last 3 years. While the company fully covers the demand of the republic for gasoline, there is a shortage of diesel fuel, which is primarily due to exports to neighbouring countries. Last year, for example, diesel fuel production was 4.8 million tonnes and consumption was almost 5.3 million tonnes. This year diesel fuel production is expected to be 5.2 million tonnes and consumption to exceed 6 million tonnes.

“KazMunayGas has taken a number of prompt measures to stabilise the situation. In particular, it was decided to postpone scheduled maintenance of Shymkent and Atyrau Refineries, which will provide up to 150,000 tonnes of additional diesel fuel. Up to 100 thousand tonnes of diesel fuel will be imported in order to meet the needs of Kazakhstan Temir Joly”, said Mr. Mirzagaliyev.

However, sales at the dead-end fuel filling stations indicate a stable situation in the region and, as a consequence, no product washout; stocks are the same. In turn, border fuel filling stations see a surge in consumption during the summer and autumn and a corresponding decrease in stocks during this period. This indicates a washout of domestic products by foreign vehicles. A similar situation is observed at roadside fuel filling stations due to the lack of oil products at the border fuel filling stations.

According to the national company, in March 2022 retail diesel fuel prices in Russia fell to the level of those in Kazakhstan, which led to an increase in stocks (lower sales) at border and roadside fuel filling stations.

It should be noted that as of today, the country has 14 days’ supply of diesel fuel, 16 days’ supply of AI-92 gasoline and 14 days’ supply of AI-95 gasoline.

According to Mr. Mirzagaliyev, in order to solve the problem of fuel and lubricants, we need to build up reserves in the country’s regions for at least 14 days of consumption.

It was also reported at the briefing about an increase in the consumption of jet fuel and bitumen, which is due to a number of factors. In 2021, production of jet fuel was 587,000 tonnes, while consumption was 662,000 tonnes. This year, the figure is expected to be 674,000 tonnes and 789,000 tonnes, respectively. It should be noted that when the refinery was revamped, the objective was to meet the needs of domestic air transport. Today, however, the increase in jet fuel consumption has been driven by an increase in refuelling by foreign carriers in transit, in particular, due to the current geopolitical situation. Therefore, the increased demand for jet fuel is being met by imports.

In terms of bitumen production, the figure for 2021 was 933,000 tonnes, while consumption was slightly lower at 931,000 tonnes. Bitumen production this year is expected to be 952,000 tonnes, while consumption, as scheduled by the Ministry of Energy and the Ministry of Industry and Infrastructure Development, is planned at 1.1 million tonnes. According to KMG, bitumen production is affected by such factors as underutilisation of non-KMG’s plants and seasonality of consumption.

As a solution, KMG is prepared to produce bitumen all year round. However, this requires a decision by the relevant government authorities to finance and purchase bitumen by road construction companies out of season. By the way, the company has already begun exploring an opportunity to increase the capacity of CASPI BITUM by 1.5 times, which will boost the production of high-quality bitumen to 750 thousand tonnes per year. A pre-feasibility study is currently underway.

Congratulations from Mr. Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, on Oil and Gas Industry Workers’ Day!

Sun, 04 Sep 2022 05:24:09 +0500

Dear all, I warmly congratulate you on Oil and Gas Workers’ Day!

This year is particularly symbolic for Kazakhstan’s leading industry. The oldest domestic oil company, Embamunaigas, has celebrated its 100th anniversary. The history of Kazakh oil originates from Karashungil, Eskene, Dossor and Makat fields. Established in Atyrau in 1922 as Embamunai Trust, the company has become the ancestral home of Kazakh oil, raising many glorious oil dynasties over its century-long history. Today, Embamunaigas JSC is one of the leading oil companies in Kazakhstan, which continues the glorious history of the company — over a century Emba’s oil workers have produced more than 188 million tonnes of black gold!

KazMunayGas, which has taken under its wing such strategic areas of oil production as exploration and production, refining and transportation, has also celebrated its 20th anniversary.

This double anniversary has gone down in the history of Kazakh oil and gas industry with the major achievements of the country’s oil workers.

Over the past 20 years, the annual production of oil and gas condensate by the companies of KMG Group has almost tripled. Total production over 20 years has exceeded 347 million tonnes. Refining has increased by 7.4 times. Total oil refined is 227 million tonnes. In 20 years, the company has grown its assets 7.5 times, annual turnover 4 times, capitalisation 7.7 times and annual net profit 5 times. Despite the global crisis, the country is also producing oil steadily.

The current generation of oil and gas workers continues to make a significant contribution to the growth of our country’s economy and prosperity. There are still nimble-fingered and strong-minded people working in the field of exploration, extraction and processing of black gold. Today, KMG Group employs up to 60,000 people. This is our industry’s most important asset!

In congratulating oil workers on their professional holiday, I congratulate the courageous and strong-willed people who work for their homeland in all weathers, whether it is hot or cold. I wish everyone good health, new professional achievements, prosperity and a happy family!

Embamunaigas JSC Celebrates Its Centenary

Fri, 02 Sep 2022 05:22:31 +0500

Embamunaigas JSC has hosted a festive event dedicated to its 100th anniversary in the Atyrau Regional Academic Drama Theatre named after Makhambet.

The celebration was attended by Alikhan Smailov, Prime Minister of Kazakhstan, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, Serik Shapkenov, Akim of Atyrau Region, oil industry veterans and officially invited guests, employees of Embamunaigas JSC.

In his congratulatory speech, the Prime Minister noted that the President of Kazakhstan Kassym-Jomart Tokayev has always emphasised the importance of developing the oil and gas sector as one of the economic priorities, and the contribution of the industry and domestic oil workers to making Kazakhstan independent. According to Mr. Smailov, Embamunaigas plays a special role in the history of Kazakh oil, as it was at the origin and has nurtured many glorious dynasties of oil workers.

“Emba’s geologists have contributed enormously to the discovery and development of the largest oil fields in Western Kazakhstan. Thanks to this, the oil industry has become the driving force behind the country’s economic development,” the Prime Minister said.

A documentary film describing the century-long journey of Embamunaigas was shown to the attendees.

The company’s history dates back to 1922, when Embaneft Trust was established to develop Dossor and Makat Fields. In 100 years, Emba’s oil workers have produced more than 188 million tonnes of black gold.

Today, Embamunaigas is one of the largest production companies in KMG Group.

A number of the company’s veterans were honoured with state awards for their significant contribution to the development of Kazakhstan’s oil industry and to mark the 100th anniversary of Embamunaigas. These include Tabyn Orzhanov and Yesen Taskinbayev, who were awarded the Order of Barys, 3rd Class, Mansia Babasheva, who was awarded the Order of Parasat, Mendesh Salikhov, Kazira Suyungarieva and Zhumabek Zhamauov, who were awarded the Order of Kurmet.

A group of veterans and employees of Embamunaigas JSC also received the Labor Glory Order, 3rd Class, and the Medal for Meritorious Service.

For reference:

Embamunaigas JSC is a subsidiary of JSC NC “KazMunayGas”. The official history of Embamunaigas JSC dates back to 1922, when Embaneft Trust was established to develop Dossor and Makat Fields. The company’s core business is exploration, oil and gas field development, oil and gas production and oil and gas treatment.

Embamunaigas JSC includes 6 business units in Atyrau and 4 in districts of Atyrau Region: Zhaiykmunaygas, Dossormunaygaz, Kainarmunaygaz, Zhylyoimunaygas, Embamunayenergo administration, and Equipment Maintenance and Packaging Administration. The company supplies oil it produces for export and domestic market. Oil is supplied to the domestic refineries in Kazakhstan. Oil is exported via two main routes: Caspian Pipeline Consortium and Uzen – Atyrau – Samara pipelines. Sales gas is sold through QazaqGas, Kazakhstan’s National Gas and Gas Supply Operator. From 1 October 2012 to 2021, Embamunaigas JSC allocated over 1 trillion 303 billion tenge in taxes to the National Fund, national and local budgets and about 4 billion 900 million tenge for the development of regional infrastructure.

Head of KazMunayGas Holds a Meeting to Discuss Production and Shipment of Oil Products from Caspi Bitum and Atyrau Refinery

Fri, 02 Sep 2022 05:20:37 +0500

Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG), held a field meeting in Atyrau to discuss the supply of the domestic market with road bitumen, production and shipment of oil products from Atyrau Refinery, and refinery maintenance dates. The meeting was attended by the management of KMG, Atyrau Refinery and Aktau Caspi Bitum.

“Yesterday, the Head of State in his address to the people of Kazakhstan made a fair criticism of the shortage of bitumen in the domestic market during the road construction season. Together with our partners and the government agencies concerned, we need to take drastic measures to change the situation,” Mr. Mirzagaliyev said.

As noted during the meeting, the demand for bitumen in Kazakhstan is still seasonal and grows in the summer period when road construction is active. In this connection, Mr. Mirzagaliyev instructed KMG’s business units in charge to discuss with the government agencies the possibility of year‑round funding (advance payments) of road construction companies by the state. This will make it possible to build up the necessary bitumen reserves on the domestic market before the road construction season begins.

Attendees also discussed increasing the capacity of Caspi Bitum by 1.5 times, which in turn would boost the production of high-quality bitumen to 750,000 tonnes a year. According to Caspi Bitum, there is an opportunity to increase oil refining capacity, the company has already developed a pre-feasibility study and experts are starting to design the capacity expansion.

Atyrau Refinery’s management also reported at the meeting that the company is operating steadily and is currently meeting its production targets. The refinery will process more than 5 million tonnes of oil by the end of this year. In order to stabilise the fuel and lubricant market, options are being explored to postpone Atyrau Refinery maintenance earlier scheduled for September. Mr. Mirzagaliyev instructed Atyrau Refinery’s management to prepare for relocating the refinery considering the current situation on the fuel and lubricant market.

For reference:

The maximum capacity of KazMunayGas’ bitumen plants is up to 800–850 thousand tonnes per year (Caspi Bitum — 500 thousand tonnes and Pavlodar Refinery — 350 thousand tonnes).

Caspi Bitum has the capability to produce packaged bitumen in big-bags, which can be used and stored in all climates and for long periods of time.

Head of KazMunayGas Orders Stable Shipment of Oil Products from Shymkent Refinery

Wed, 31 Aug 2022 05:18:10 +0500

On 31 August, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG), paid a field visit to Shymkent Refinery.

During his visit, Mr. Mirzagaliyev met with the management of KMG, refinery and partners.

At the meeting, Yerbolat Kozhabayev, President of PetroKazakhstan Oil Products LLP (PKOP), reported on the refinery’s results over 7 months of this year, achievement of the production programme and preparations for the scheduled maintenance postponed to 2023. During the first seven months of 2022, PKOP processed 3.6 million tonnes of oil, produced almost 1.2 million tonnes of gasoline, 1.1 million tonnes of diesel fuel, 204,000 tonnes of jet fuel and other oil products. Please note that during the same period of 2021, PKOP processed almost 2.7 million tonnes of oil, produced more than 1 million tonnes of gasoline, 779,000 tonnes of diesel fuel and 149,000 tonnes of jet fuel.

“I would like to note that Shymkent Refinery is operating steadily and is currently meeting its production targets in full exceeding them by 1,100 tonnes of diesel fuel. Key drivers of the current tense situation in the fuel and lubricant market are the existing disparity in fuel and lubricant prices compared to neighbouring countries and high crossflows of oil products produced in Kazakhstan, especially the illegal export of diesel fuel,” Mr. Mirzagaliyev said.

In this connection, the Head of KazMunayGas called on the government authorities to strengthen supervision, especially along the Kazakhstan’s border, and to take urgent and drastic measures to halt the illegal export of oil products from the country.

It should be stressed that all three refineries are currently operating at their maximum capacity and are meeting the approved oil product targets in full. Moreover, the previously scheduled maintenance of Shymkent Refinery was postponed until 2023 in order to avoid shortages, which will allow the refinery to exceed its September target for diesel fuel by 70,000 tonnes and the year-end target by 20,000 tonnes.

As it was noted at the meeting that if under-the-counter export of oil products is not stopped, all the efforts of oil refiners would be futile. The refinery’s management together with KMG Upstream have been instructed to prepare the necessary materials on the illegal export of oil products to be further submitted to government authorities.

At the end of the meeting, Mr. Mirzagaliyev, Head of KMG, instructed the refinery’s management to ensure stable and trouble-free operation of PKOP, achieve the production programme and meet all indicators, and to continue implementing social policy to create necessary conditions for work, everyday life and health of employees. Attendees also pointed out the need to strengthen monitoring and build effective cooperation with partners on the timely shipment and logistics of oil products.

During his trip, Mr. Mirzagaliyev also visited SAUTS-OIL LLP’s coal-chemical and petrochemical plants under construction to produce K-5 motor fuel in Turkestan Region. The company’s management presented the Head of KMG with technology that would enable the plants to process hydrocarbons such as gas condensate, oil sludge, as well as coal and peat, in addition to oil.

Head of KMG Holds a Meeting on Diesel Fuel Situation at Pavlodar Refinery

Sat, 27 Aug 2022 05:15:17 +0500

On Saturday, 27 August, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG), paid a field visit to Pavlodar Refinery.

During a meeting in Pavlodar attendees discussed the current situation regarding the supply of diesel fuel (DF) to the domestic market and its shipment from KMG’s refineries. The meeting was attended by the management of KMG, Pavlodar Refinery, Pavlodar Region Akim Abylkair Skakov and representatives of fuel filling station retail chains.

Arman Kairdenov, Deputy Chairman of KMG’s Management Board for Oil Refining and Petrochemicals, reported stable annual growth in oil refining and oil product output. The oil refining target for three major refineries for 2022 has been increased by almost 1 million tonnes versus 2021. Thus, KMG will refine almost 17 million tonnes of oil this year. However, the refineries are running at their maximum capacity, which requires round-the-clock monitoring of equipment.

According to fuel filling station representatives, there is abnormally high demand for diesel fuel in the domestic market. In recent years, diesel fuel consumption in Kazakhstan has been growing mainly due to high demand in the areas bordering Russia, Uzbekistan and Kyrgyzstan. This is due to the transit refuelling of heavy vehicles from these countries, and also possible smuggling of fuel oil. This is also driven by the disparity in fuel prices with neighbouring countries.

As representatives of domestic fuel filling stations pointed out, the retail price of diesel fuel in Kazakhstan is 1.5 times cheaper than in Russia. In August 2022, for example, diesel prices at Russian fuel filling stations were 429 tenge per litre, while in Kazakhstan they were 238 tenge per litre. As a result, cheaper Kazakh fuel is “flowing” into border regions and subsidising the market of neighbouring countries. Additionally, the current domestic supply of fuels and lubricants is under pressure from the active transport of agricultural and horticultural products from Central Asian countries to Kazakhstan and Russia.

According to Mr. Kairdenov, current consumption of diesel fuel in Kazakhstan will increase by at least 800,000 tonnes from 2020. While in 2020 the figure was 4.7 million tonnes, by the end of 2022 it is expected to be 5.5 million tonnes.

At the end of the meeting, Mr. Mirzagaliyev, Head of KMG, instructed to ensure stable sales of diesel fuel on the Kazakhstan market during the forthcoming autumn field work, continuously monitor trouble-free operation of KMG’s refineries and achieve the production target for 2022. It is also necessary to strengthen cooperation with Kazakhstan Temir Zholy on timely delivery of railcars and locomotives for uninterrupted shipment of oil products from refineries. He also recalled that it was decided to postpone the scheduled maintenance of Shymkent Refinery to 2023 in order to avoid a shortage of oil products this year.

KazMunayGas Warns Kazakh Residents of Online Scam Threats

Fri, 26 Aug 2022 05:13:05 +0500

International scammers run massive advertising on search engines and social media that directs users to scam websites calling for “profitable investments in KazMunayGas” with promises of high and passive returns.

To make it more convincing, these fake websites mention the names of brand people: the President of the Republic of Kazakhstan, heads of national companies and financial institutions, opinion leaders. Scammers use video footage from publicly available official videos of KazMunayGas substituting the original audio tracks. As a result, the visitor is shown a fake video in which a professional voice-over narrator voices outright lies mentioning the company’s name.

The first time users visit a fake website, they are first invited to “take a test” or simply answer two or three preliminary questions that allow the criminals to find out the visitor’s email, nationality and mobile phone number. To make it look plausible, websites display a picture of a professional securities market participant’s licence, allegedly issued by the National Bank of Kazakhstan. An investor calculator script is also used to calculate the “high yield” online.

Keep in mind that there are over 1,500 top-level domains worldwide, including some 300 national domains (many of which are registered and operated by private firms and corporations), and the owners of scam websites are often non-residents of Kazakhstan. Therefore, even if a scam website is revealed, it is extremely difficult to terminate it due to the foreign jurisdiction of the owners of scam websites.

Fake websites are mainly created in international zones (in the .COM zone and others), such as kazmynai-gaz.com, kz-finvesting.com, kz-gaz555.com, butterflyexpect.com, kaz-gaz.org, greyongrey.com, healbrowl.com/logistics, murrindindi.org/info. Fake websites are also created in specific domain zones (such as kazmunaigas.club, tiddley.work, kz.dahod.shop, investor-test.top and a number of others). If you check these domain names, you will find that they are registered in CIS or non-CIS countries.

Besides the websites, at least six scam apps have been identified.

The first fake app, KazMunay Invest, parasitising on the company’s brand, was published on Google Play on 8 July 2022 and had been downloaded by more than 50,000 users by early August. The scammer’s contact details pointed to a website registered in the domain zone of Tokelay (.TK) in the New Zealand islands. It has now been removed from the playmarket. Then came fake apps — KazMunayGas, KazMunayGas Invest, KazMunay Club Invest, KazInvest, KazMunayInvest. However, KMG does not have any official app and there are no plans to develop one yet.

The Company has sent an appeal against all these scams to the Financial Monitoring Agency (FMA), the National Bank of Kazakhstan and the Ministry of Internal Affairs of Kazakhstan. The Nur‑Sultan Police have opened a criminal case. Investigations are currently ongoing. Requests have been sent to block scam websites and apps.

KazMunayGas officially states that it has only one official website — www.kmg.kz. All other websites acting on behalf of KazMunayGas are scam. We urge Kazakh residents and non-residents to exercise caution and to trust only official websites.

Reliable information about the company is only posted on the official website and on official social media accounts.

In addition, citizens of Kazakhstan can contact the Financial Market Regulation and Development Agency at 1459 for advice on protecting their rights and interests as consumers of financial services.

Announcement of the tender for the project "Construction of a seawater desalination plant" in Kenderli

Thu, 25 Aug 2022 10:08:50 +0500

"Ak Su KMG" LLP, a 100% subsidiary of JSC NC "KazMunayGas", announces the 1^st stage (pre-qualification) of the international tender for the selection of an EPC Contractor for the project «Construction of a 50,000 m³/day Seawater Desalination Plant at the location: Mangistau Region, in the Area of Tokymak, the Recreation Area “Kenderli”» (hereinafter - as «Project»).

The main objectives of the Project are as follows:

to solve the water problem for the population and enterprises of Zhanaozen;
to reduce the financial and technical burden on the Astrakhan-Mangyshlak main water supply system;
to reduce existing water shortages; and
to reduce the burden on the social security sector in Mangistau region
improving the quality and standard of living of the population in Zhanaozen and in the surrounding areas.

Construction dates: 2nd quarter of 2023 – end of December 2024.

It is expected that Companies participated in the Pre-qualification, should have experience in the design and implementation of seawater reverse osmosis technology of comparable capacity.

Prequalification start date:

25.08.2022

Closing date for applications for prequalification:

10.10.2022 (17:00 pm Nur-Sultan time)

Interested eligible Participants may collect the prequalification documents from “Sharepoint” website starting by 25 August 2022. For the purpose of accessing the prequalification documents, it is mandatory for interested Participants to send access request to:

L.Umarov@kmg.kz

Ibrahim.Akin@ilf.com

Participant shall include the information as below:

Project: "Seawater Desalination Plant" in Kenderli

Company name

Name & Surname, Position

E-mail address

Mobile telephone

Company Telephone

For any questions about the competition, please email L.Umarov@kmg.kz.

For reference:

The project is being implemented within the framework of timely execution of the instructions of the Head of State, as well as the implementation of Comprehensive plans for the socio-economic development of Atyrau and Mangystau regions in order to meet the existing demand and ensure uninterrupted supply of drinking water to consumers in Zhanaozen.

JSC NC KazMunayGas announces financial results for the first half of 2022

Thu, 25 Aug 2022 05:02:57 +0500

Joint-stock National Company KazMunayGas (“KMG” or Company), Kazakhstan's national vertically integrated oil and gas company, publishes its interim condensed consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) 34 "Interim Financial Statements" for the three and six months ended on June 30, 2022, with a report on the results of the review of interim financial information by an independent auditor.

Key financial indicators for the first half of 2022^[1]:

Revenue increased by 57.3% and amounted to 4,203 bln tenge (USD 9,339 mln) compared to 2,672 bln tenge (USD 6,299 mln) in the first half of 2021;
EBITDA increased by 49.2% to 1,119 bln tenge (USD 2,486 mln) compared to 750 bln tenge (USD 1,767 mln) in the first half of 2021;
The Company's net profit in the reporting period increased by 5.0% and amounted to 677 bln tenge (USD 1,504 mln);
Net profit adjusted for the share in profit of JVs and associates[2] amounted to 156 bln tenge (USD 348 mln) compared to 384 bln tenge (USD 904 mln) in the first half of 2021;
FCF amounted to 188 bln tenge (USD 417 mln), compared to 291 bln tenge (USD 685 mln) in the first half of 2021;
Total debt as of June 30, 2022 amounted to 3,935 bln tenge (USD 8,366 mln) compared to the indicator as of December 31, 2021 in the amount of 3,746 bln tenge (USD 8,676 mln);
The Company's net debt as of June 30, 2022 amounted to 2,292 bln tenge (USD 4,872 mln) compared to the indicator as of December 31, 2021 in the amount of 2,204 bln tenge (USD 5,104 mln).

	UoM	1H 2022	1H 2021	%
Dated Brent[3], average	$/bbl	107.94	64.98	66.1%
Dated Urals³, average	$/bbl	84.86	63.59	33.5%
Exchange rate, average	KZT/USD	450.06	424.22	6.1%
Revenue	bln tenge	4,203	2,672	57.3%
Share in profit of JVs and associates, net	bln tenge	644	324	98.5%
Net profit	bln tenge	677	644	5.0%
Net profit adjusted for the share in profit of JVs and associates	bln tenge	156	384	-59.2%
EBITDA⁴	bln tenge	1,119	750	49.2%
Adjusted EBITDA⁵	bln tenge	598	489	22.4%
CAPEX (accrual basis)	bln tenge	164	167	-1.7%
CAPEX (cash basis)	bln tenge	166	153	8.7%
FCF⁶	bln tenge	188	291	-35.4%
Gross debt⁷	bln tenge	3,935	3,746⁸	5.0%
Net debt⁹	bln tenge	2,292	2,204	4.0%

Operating results for the first half of 20229:

The volume of oil and gas condensate production increased by 0.3% and amounted to 10,774 thous. tonnes;
Oil transportation volumes increased by 0.6%, amounting to 37,157 thous. tonnes;
Hydrocarbons refining volumes at the Kazakh and Romanian refineries cumulatively increased by 0.2% and amounted to 9,721 tonnes.

Indicator	UoM	1H 2022 (net to KMG)	1H 2021 (net to KMG)	%
Oil production	thous. tonnes	10,774	5,738	0.3%
Gas production	mln m³	4,110	4,079	0.8%
Oil transportation	thous. tonnes	37,157	36,949	0.6%
Oil refining	thous. tonnes	9,721	9,704	0.2%

Financial Highlights for the first half of 202211

Revenue

Revenue for the first half of 2022 amounted to 4,203 bln tenge (USD 9,339 mln), which is 57.3% higher than in the first half of 2021.

Revenue dynamics were positively impacted by the increase in the average price of Brent crude oil by 66.1% YoY and the weakening of the average exchange rate of the tenge against the US dollar by 6.1%.

________________________

⁴ EBITDA = Revenue plus Share in profit of JVs and associates, net, minus Cost of purchased oil, gas petroleum products and

refining costs minus Production expenses minus General and administrative expenses minus Transportation and Selling expenses minus Taxes other than income tax.

⁵ Adjusted EBITDA = Revenue plus Dividends from JVs and associates minus Cost of purchased oil, gas petroleum products and refining costs minus Production expenses minus General and administrative expenses minus Transportation and selling expenses minus Taxes other than income tax. Adjusted EBITDA for 1H2021 does not includes dividends from KazTransGas Joint ventures and Associates.

⁶ Free Cash Flow = Net cash flow from operating activities minus Purchase of property, plant and equipment, intangible assets, investment property and exploration and evaluation assets. Dividends received from JVs and associates are included in cash flow from operating activities.

⁷Gross debt at the end of the reporting period = bonds plus loans (short-term and long-term). Guarantees issued are not included in the calculation.

⁸Gross debt and net debt are as of December 31, 2021.

⁹Net debt at the end of the reporting period: Bonds plus loans minus cash and cash equivalents minus bank deposits (short-term and long-term). Guarantees issued are not included in the calculation.

¹⁰Production figures are given in accordance with KMG's share of ownership in shares and associates and 100% of indicators for consolidated subsidiaries. More detailed information is available in the press release on the production results for the first half of 2022 at the link: https://www.kmg.kz/rus/investoram/reporting-and-financial-result/.

¹⁹On March 11, 2021, the Company and Samruk-Kazyna signed a trust management agreement in respect of 100% of the common shares of KazTransGas JSC (“KTG”). On November 9, 2021, the Company transferred 100% of KTG shares to Samruk-Kazyna for 1 tenge and the trust management agreement was terminated. The transaction was preceded by the fulfillment of a number of legal and financial conditions, including obtaining approvals from state bodies and KMG's creditors. The last of the conditions was fulfilled on November 8, 2021. Effective from November 8, 2021, KTG has been classified as a discontinued operation. For details, see Note 4 to the Interim Condensed Consolidated Financial Statements for the three months ended 31 March 2022.

Share in profit of joint ventures and associates

The share of profits of joint ventures and associates for the first half of 2022 more than doubled to 644 bln tenge (USD 1,430 mln), mainly as a result of an increase in profits of “Tengizchevroil” LLP by

202 bln tenge (USD 422 mln), “KMG Kashagan B.V.” by 67 bln tenge (USD 144 mln).

EBITDA

EBITDA for the first half of 2022 amounted to 1,119 bln tenge (USD 2,486 mln), an increase of 49.2% compared to 750 bln tenge (USD 1,767 mln) in the first half of 2021, mainly due to an increase in profits in joint venture enterprises and associated companies, in particular, “Tengizchevroil” LLP and “KMG Kashagan B.V.”.

Adjusted EBITDA

Adjusted EBITDA, reflecting dividends received from joint ventures and associates, excluding share in income of joint ventures and associates, for the first half of 2022 amounted to 598 bln tenge (USD 1,329 mln), showing an increase of 22.4% year by year.

Net profit

The Company's net profit increased by 5.0% from 644 bln tenge (USD 1,519 mln) in the first half of 2021 to 677 bln tenge (USD 1,504 mln) in the first half of 2022.

Net profit adjusted for the share in profit of JVs and associates

The Company's net profit adjusted for the share in profit of JVs and associates t decreased by 59.2% from 384 bln tenge (USD 904 mln) to 156 bln tenge (USD 348 mln).

Cost of purchased oil, gas, oil products and other materials

The cost of purchased oil, gas, oil products and other materials in the reporting period increased by 73.8% compared to the first half of 2021 and amounted to 2,818 bln tenge (USD 6,261 mln). The increase in production costs was largely due to the increase in the average oil price and the weakening of the average exchange rate of tenge against the US dollar.

Operating expenses

Operating expenses for the first half of 2022 increased by 54.2% compared to the first half of 2021 and amounted to 482 bln tenge (USD 1,071 mln), mainly due to increased losses from oil derivatives of KMG International N.V. and growth of expenses for wages to employees in the regions of presence in general for KMG.

Transportation and distribution costs amounted to 70 bln tenge (USD 155 mln), up to 6.5% compared to the first half of 2021.

General and administrative expenses increased by 17.0% to 67 bln tenge (USD 148 mln), due to an increase in employee salaries.

Taxes other than income tax increased by 53.3% in the first half of 2022 to 291 bln tenge (USD 647 mln), mainly as a result of higher rent tax and MET expenses due to higher oil prices.

Finance costs for the first half of 2022 amounted to 153 bln tenge (USD 341 mln), which is 32.4% more than in the first half of 2021, mainly due to an increase in interest expense on loans and bonds due to the weakening of the average tenge exchange rate, as well as in connection with the write-off of previously recognized costs due to the early repayment of a loan from Eximbank.

Capital expenditures

In the first half of 2022, capital expenditures (on an accrual basis, disclosed in segment reporting) of the Company amounted to 164 bln tenge (USD 364 mln), decreasing by 1.7%.

Debt management

Debt indicators

	UoM	Jun.30, 2022	Dec. 31, 2021	%
Bonds	bln tenge	2,949	2,706	9.0%
Loans	bln tenge	986	1,040	-5.2%
Gross debt	bln tenge	3,935	3,746	5.0%
Financial guarantee, not included in the consolidation	bln tenge	0	1.6	-100.0%
Gross debt with guarantee obligations	bln tenge	3,935	3,748	5.0%

Numbers may not add up due to a rounding.

Total debt as of June 30, 2022 was 3,935 bln tenge (USD 8,366 mln), an increase of 5.0% in tenge compared to December 31, 2021 (a decrease of 3.6% in dollar terms).

In the first quarter of 2022, KMG International N.V. received syndicated loan to finance working capital in the amount of USD 126 mln (56.6 bln tenge).

Due to the increase in the exchange rate (tenge against ruble), there was an increase in the debt from VTB Bank denominated in Russian rubles in terms of dollar and tenge.

Net debt

Net debt as of June 30, 2022 was 2,292 bln tenge (USD 4,872 mln), which is 4.0% higher in tenge than as at December 31, 2021.

Cash and cash equivalents

Consolidated cash and cash equivalents including deposits

	UoM	Jun.30, 2022	Dec.31, 2021	%
Cash and cash equivalents	bln tenge	973	976	-0.3%
Short-term deposits	bln tenge	609	511	19.4%
Long-term deposits	bln tenge	60	56	7.8%
Cash and cash equivalents including deposits	bln tenge	1,643	1,542	6.5%

The numbers may not add up due to rounding.

Consolidated cash, cash equivalents, including cash in the form of deposits as of June 30, 2022 increased by 6.5% compared to the indicator as of December 31, 2021, and amounted to 1,643 bln tenge (USD 3,494 mln). The increase in cash and cash equivalents was mainly due to the weakening of the tenge against the US dollar. In dollar terms, consolidated cash equivalents decreased by 2.2% to USD 3,494 mln from USD 3,572 mln as of 31 December 2021.

Key corporate events from the beginning of 2022:

On 21 January 2022, Atyrau Refinery made full early repayment of the loan from Eximbank in the amount of USD 604 mln (259 bln tenge), including interest.
Since 15 April 2022, Mirzagaliev M.M. has been appointed as the Chairman of the Management Board of KMG.
Since the beginning of 2022, new appointments have been made in the structure of the Board of Directors and the Management Board of KMG. As of June 7, 2022, the Board of Directors of KMG consists of 8 people (Walton K.D. - Chairman of the Board of Directors, Mirzagaliev M.M., Karabalin U.S., Zhanadil Ye.B., Auganov G.K., Holland F.M., Miller T.G., Khairova A.A.), the Management Board of KMG consists of 8 people (Mirzagaliev M.M. - Chairman of the Board, Iskaziyev K.O., Karabaev D.S., Munbaev M.K., Abdulgafarov D.Ye., Kayirdenov A.K., Zakirov B.K., Lavrenov V.S.).
On 13 June 2022, the Company completed the acquisition of a 49.5% stake in Kazakhstan Petrochemical Industries Inc. LLP, which is implementing a large-scale project for the construction of a polypropylene plant.
On 20 June 2022, the Company, in accordance with the decision of Samruk-Kazyna JSC and the National Bank of the Republic of Kazakhstan, completed the payment of dividends on KMG shares for 2021 in the amount of 327.80 tenge per share for a total amount of 200 bln tenge.
On 23 June 2022, KMG opened its representative office in Aktau in order to strengthen work in the region of presence on issues of interaction with local executive bodies, trade unions of KMG subsidiaries and contractors, implementation of projects to ensure employment of the population, control over the execution of production programs, as well as fields development.
In July 2022, the Company acquired a 49% stake in Petrosun LLP, the main activity of which is the sale of liquefied petroleum gas and petroleum products.

^[1] The amounts were converted to US dollars for user convenience at average exchange rates for respective periods (average USD/KZT for the first half of 2022 and 2021 were at 450.06 and 424.22 respectively; period-end USD/KZT as of 30 June 2022 and 31 December 2021 were at 470.34 и 431.80 respectively).

[2] Net profit adjusted for the share in profit of JVs and associates = Net profit plus Dividends from JVs and associates minus Share in profit of JVs and associates

[3] Source: S&P Global Platts.

KMG’s Refineries Do Not Sell or Export Bitumen

Fri, 19 Aug 2022 03:05:17 +0500

The refineries of JSC NC “KazMunayGas” are only engaged in oil refining and manufacture of petroleum products and do not independently sell bitumen to road building companies.

The bitumen production and sales mechanism currently adopted by RoK is as follows:

The RoK Ministry of Energy monthly approves the Plan for Road Bitumen Supply to Resource Holders, which specifies inter alia the road bitumen volumes to be sold through commodity exchanges (10% of each resource holder’s planned production volume).
The resource holders sell their bitumen directly to road building companies.

The structure of JSC NC “KazMunayGas” includes two plants engaged in bitumen production: Aktau Bitumen Plant (Caspi Bitum) and Pavlodar Oil Chemistry Refinery (POCR). Both plants meet their production targets for 2022.

For 7 months of 2022, KMG’s two refineries have produced 401.2 thousand tonnes of bitumen, out of which 247.8 thousand tonnes have been produced by Caspi Bitum and 153.4 thousand tonnes have been produced by POCR.

The total bitumen production target for KazMunayGas’s two refineries in 2022 is 733 thousand tonnes. By achieving this target, KMG will cover approximately 70% of the national demand for road bitumen.

The bitumen produced at POCR and Caspi Bitum is only sold in the domestic market and not exported.

Heads of KazMunayGas and Chevron Discuss Implementation of Joint Projects

Thu, 18 Aug 2022 03:06:57 +0500

On 18 August, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG), held negotiations via video conference with Michael Wirth, Chairman of the Board and CEO of Chevron Corporation.

The parties discussed a wide range of issues relevant to bilateral cooperation. In particular, they addressed the priority tasks related to export of oil and petroleum products by Tengizchevroil LLP.

A separate item on the agenda was implementation of petrochemical projects.

“Given the global trends in the search for alternative energy sources, the key to maintaining the priority status of the oil and gas sector seems to be the development of petrochemical industry, which will become the main consumer of the produced oil and gas. With Chevron’s support, the raw materials for the current anchor polypropylene, polyethylene and butadiene production projects are supplied from the Tengiz field,” noted M. Mirzagaliyev.

The heads of KMG and Chevron also emphasised the need to timely implement the Future Growth Project – Wellhead Pressure Control Project (FGP–WPCP) and to support the local executive authorities as related to FGP–WPCP completion and phased release of employees.

Head of KazMunayGas Meets with SOCAR President in Baku and Visits Company’s Assets in Batumi

Tue, 16 Aug 2022 03:08:12 +0500

On 15 August, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG), during his working visit to Baku, held a meeting with Rovshan Najaf, the President of State Oil Company of the Azerbaijan Republic (SOCAR).

The parties addressed bilateral cooperation issues, including liaison between the companies in the development of the Trans-Caspian infrastructure.

On 16 August, M. Mirzagaliyev continued his working trip by visiting Batumi to have a look at the Batumi Oil Terminal and Batumi Sea Port operations.

The Batumi Oil Terminal (BNT) assets were acquired in 2008 by KMG’s subsidiary, KazTransOil JSC. The Batumi Oil Terminal has the right to manage the Batumi Sea Port until 2055. BNT Group’s profit in 2021 was almost 2.5 billion tenge.

It should be noted that the terminal provides oil and petroleum products transshipment services, including unloading, accumulation and tanker loading, for clients from Kazakhstan, Azerbaijan, Turkmenistan, Georgia and other countries. The port provides transshipment, storage and warehousing services for dry, bulk and general cargo, as well as maintenance services for vessels and other vehicles.

Athletic Contest Among KazMunayGas Group’s Employees Ends in Atyrau

Fri, 12 Aug 2022 03:09:56 +0500

A four-day athletic contest among the employees of JSC NC “KazMunayGas” (KMG) subsidiaries has ended in Atyrau. The sports event was held to mark KMG’s 20th Anniversary and Embamunaigas JSC’s 100th Anniversary. The athletic contest took place on 8 to 11 August with participation of more than 400 athletes from among the oil industry specialists employed by 20 KMG’s subsidiaries, who had passed the elimination rounds. They competed for medals in 9 disciplines: ping-pong, lawn tennis, chess, volleyball, basketball, swimming, futsal, togyzkumalak (a Kazakh tabletop game) and track and field.

“Let me congratulate the participants of the athletic contest held to mark Embamunaigas JSC’s 100th Anniversary and KMG’s 20th Anniversary. Your sports and professional achievements make you role models for the younger generation. National Company “KazMunayGas” is proud of you! On behalf of Chairman of KMG’s Management Board and the employees and on my own behalf, I would like to thank everyone who took part in this athletic contest,” said Kurmangazy Iskaziyev, Deputy Chairman of KMG’s Management Board for Exploration and Production, who attended the athletic contest closing ceremony.

As part of the athletic contest, a friendly match was held between KMG’s corporate futsal team and the famous Kairat football club.

KazMunayGas Group’s Athletic Contest Starts in Atyrau

Mon, 08 Aug 2022 03:13:56 +0500

On 8 August, the Munaishy Central Stadium in Atyrau hosted the opening ceremony of the athletic contest among JSC NC “KazMunayGas” (KMG) subsidiaries and associated companies. The sports event is held to mark the National Company’s 20th Anniversary and Embamunaigas JSC’s 100th Anniversary.

In his welcome address, Yerkhan Umarov, KMG Chief of Staff, wished brilliant victories and good luck to the teams.

About 20 teams comprising over 400 employees in total will compete for medals in 9 sports disciplines. These include ping-pong, lawn tennis, volleyball, basketball, swimming, futsal, togyzkumalak (a Kazakh tabletop game) and track and field. The contest will be hosted by 6 sports facilities in Atyrau.

JSC NC KazMunayGas 1H of 2022 Trading Update

Fri, 05 Aug 2022 04:48:10 +0500

Highlights for the first half of 2022:

Oil and gas condensate production increased by 0.3% and amounted to 10,774 thous. tonnes;
Oil transportation volumes increased by 0.6% and amounted to 37,157 thous. tonnes;
Hydrocarbons refining volumes at the Kazakh and Romanian refineries cumulatively increased by 0.2% and amounted to 9,721 thous. tonnes.

	1H 2022 (net to KMG)	1H 2021 (net to KMG)	%
Oil production, thous. tonnes	10,774	10,738	0.3%
Gas production, mln m³	4,110	4,079	0.8%
Oil transportation, thous. tonnes	37,157	36,949	0.6%
Oil refining, thous. tonnes	9,721	9,704	0.2%

Operating results are represented in accordance with KMG's ownership interest in joint ventures and associates and 100% of results for consolidated subsidiaries, unless otherwise stated.

Upstream

Oil and gas condensate production volume for the first half of 2022 amounted to 10,774 thous. tonnes (447 kbopd) representing an increase by 0.3% compared to the same period of previous year. Production volume of natural and associated gas raised by 0.8% to 4,110 mln m³.

Oil and condensate production, thous. tonnes	1H 2022 (net to KMG)	1H 2021 (net to KMG)	%
OMG	2,501	2,629	-4.8%
MMG	1,474	1,445	2.0%
EMG	1,267	1,213	4.5%
Tengiz	2,867	2,707	5.9%
Kashagan	601	613	-2.0%
Karachaganak	549	539	1.8%
Others	1,514	1,591	-4.8%
Total	10,774	10,738	0.3%

Oil production at Tengiz increased by 5.9% compared to the first half of last year, amounting to 2,867 thous. tonnes (126 kbopd). Associated gas production also increased by 6.2%, amounting to 1 599 mln m³. The increase in production was due to easing of restrictions under the OPEC+ agreement.

Oil production at Kashagan decreased by 2.0% due to a complete shutdown of production facilities at the offshore and onshore complexes for scheduled overhaul from June 1 to July 5, as a result of which the volume of production at the share of KMG in the first half of this year decreased to 601 thous. tonnes (26 kbopd). Associated gas production decreased by 0.5% and amounted to 372 mln m³.

Oil and condensate production at Karachaganak increased by 1.8% and amounted to 549 thous. tonnes (24 kbopd). Gas production increased by 4.7% and amounted to 1,051 mln m³. The increase in production was due to the commissioning of the 4th gas re-injection compressor and an increase in gas processing.

The volume of oil and condensate production at operating assets decreased by 1.8% to 6,757 thous. tonnes (270 kbopd). The decline in oil and condensate production in the first half of the year was mainly due to the repeated emergency power outages by the utility company serving production facilities of Ozenmunaigasand a natural decline in production levels at mature fields, at the same time, the decline in volumes was slightly offset by an increase in production at the Embamunaigas fields due to the commissioning of the new horizontal wells. Gas production decreased by 9.0%, amounting to 1,088 million m³ mainly due to the transfer of JSC "KazTransGas" (JSC NC "QazaqGaz") in November 2021, which owns the gas production asset Amangeldy Gas.

Midstream

The volume of oil trunk pipelines and sea transportation in the first half of 2022 increased by 0.6% compared to the same period of the last year and amounted to 37,157 thous. tonnes¹.

Oil transportation, thous. tonnes	6M 2022 (100%)	6M 2022 (net to KMG)	6M 2021 (net to KMG)	%
KazTransOil	19,959	19,959	20,428	-2.3%
Kazakhstan-China Pipeline	9,727	4,864	4,211	15.5%
MunaiTas²	2,622	1,337	979	36.6%
Caspian Pipeline Consortium	30,482	6,325	6,236	1.4%
Kazmortransflot	4,673	4,673	5,095	-8.3%
Total		37,157	36,949	0.6%
1 Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation. 2 Munaitas is an equity-consolidated joint venture and transportation volumes are quoted at a 51% ownership interest.

The volume of oil transportation through trunk pipelines in the first half of 2022 increased by 2.0% and amounted to 32,485 thous. tonnes. There was a growth in the volumes of oil supplied by MunaiTas and Kazakhstan-China Pipeline due to an increase of the volumes towards Kazakhstan’s refineries to ensure the required refining volumes in the domestic market. At the same time, export volumes of KazTransOil decreased due to natural decline in oil production at mature fields and also due to the oil redistribution by shippers through the pipelines of the Caspian Pipeline Consortium and the Kazakhstan China Pipeline.

Compared to the same period, the total volume of oil transportation by sea in the first half of 2022 decreased by 8.3% to 4,673 thous. tonnes, affected by lower volumes in the Black Sea due to the overhaul of the Petromidia refinery, as well as reduction of crude oil supply because of adverse weather conditions in the Black Sea.

Trading

Sales volumes of KMG's own produced oil and gas condensate for the first half of 2022 slightly decreased by 0.2% and amounted to 10,811 thous. tonnes, of which 61.1% was exported.

Supplies of own produced oil and gas condensate volumes to the domestic market amounted to 6,796 thous. tonnes, including deliveries of crude oil from operating assets (Ozenmunaigas, Embamunaigas, Kazakhturkmunai and Urikhtau Operating) in the amount of 2,484 thous. tonnes to Atyrau, Shymkent and Pavlodar refineries for further oil refining and sales of oil products.

Downstream

Hydrocarbon refining, thous. tonnes	6M 2022 (net to KMG)	6M 2021 (net to KMG)	%
Atyrau refinery	2,681	2,587	3.6%
Pavlodar refinery	2,839	2,876	-1.3%
Shymkent refinery¹	1,518	1,105	37.3%
Caspi Bitum	211	222	-5.0%
Petromidia	2,310	2,726	-15.3%
Vega	163	188	-13.3%
Total	9,721	9,704	0.2%
[1] Shymkent refinery processing volume is indicated at a share of 50%

For the first half of 2022, the total volume of hydrocarbon processing slightly increased by 0.2% compared to the same period in 2021 and amounted to 9,721 thous. tonnes:

At Kazakhstani refineries, the volume of hydrocarbon processing increased by 6.8% and amounted to 7,248 thous. tonnes. The increase in refining volumes was due to the shutdown of production at Shymkent refinery in May-June last year for a scheduled overhaul, as well as the shutdown of production at the Atyrau Refinery in the same period last year due to voltage drops in electrical networks;
The volume of refining at the KMG International refineries (Petromidia, Vega) in Romania dropped by 15.1% and amounted to 2,473 thous tonnes. The decrease in processing volumes is associated with the shutdown of the Petromidia plant for scheduled repairs this spring, as well as due to disruptions in crude oil supply because of adverse weather conditions in the Black Sea.

For the first half of 2022 the volume of production of oil products at Kazakh and Romanian refineries almost unchanged and amounted to 8,760 thous. tonnes:

Kazakhstani refineries produced 6,340 thous. tonnes of oil products, which is 6.3% more than the same period of last year, due to the growing demand for light oil products in the domestic market, as well as an increase in the share of Buzachi heavy oil loading at Shymkent refinery for the production of dark oil products;
Refineries of KMG International (Petromidia, Vega) produced 2,420 thous. tonnes of oil products, which is 14.3% lower than in the first half of 2021 due to a corresponding decrease in refining volumes at the Petromidia refinery in Romania.

KazMunayGas Discloses Climate Data to Investors

Mon, 01 Aug 2022 10:42:47 +0500

On 29 July, JSC NC “KazMunayGas” (KMG) published its voluntary reporting for 2021 on greenhouse gas emissions and water management as part of the global climate initiative called the Carbon Disclosure Project.

Improving international climate reporting is one of the priorities of approved KMG’s 2022–2031 Low-Carbon Development Programme. KazMunayGas voluntarily discloses data on direct and indirect greenhouse gas emissions and water footprint for all assets, makes independent verification, and shares information with the international community on the corporate climate change and water conservation strategy, the effectiveness of greenhouse gas and water management, key risks and opportunities.

KMG has formally announced its intention to introduce reporting on climate-related financial disclosures based on the principles of TCFD (Task Force on Climate-Related Financial Disclosures), with a focus on the assessment of climate risks and their financial impact on the company’s business. KMG also intends to develop the internal carbon‑pricing concept in order to create incentives and facilitate investment decisions.

This will support the sustainability reporting and implementation of ESG principles. Broad availability of environmental information and transparency of the Company’s environmental activities to the public, shareholders, concerned government authorities and other parties is one of the tenets of the Company’s Environmental Policy and KMG’s Sustainable Development Policy.

By disclosing its policies and efforts aimed at greenhouse gas emission reduction and sustainable water management, the Company declares its openness and conduct of business based not only on the principles of economic viability, but also on sustainable development requirements and commitment to meet the goals of the Paris Agreement.

To see CDP questionnaires, go to https://www.kmg.kz/eng/investoram/reporting-and-financial-result/.

Background:

About JSC National Company “KazMunayGas”

About the Carbon Disclosure Project

The Carbon Disclosure Project (CDP), which has been in existence since 2000, has become the gold standard for greenhouse gas emission disclosure method and process. It is the most important source of climate change data for the global market. CDP’s electronic carbon reporting database is the world’s largest register of the most comprehensive information on corporate greenhouse gas (GHG) emissions and corporate climate change strategies that investors use when making investment decisions. CDP is made up of more than 700 investors with more than $130 trillion in assets.

Head of KMG visits Desalination Plant at Karazhanbas Field

Sat, 30 Jul 2022 10:00:15 +0500

On July 29, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG), visited the desalination plant at Karazhanbas field during his business trip to Mangistau Region.

Let us recall that the plant built following the instruction of Kazakh President Kassym-Jomart Tokayev to solve the problem of drinking water shortages in the region was put into trial operation on 1 July. The plant located in Tupkaragan District of Mangistau Region currently produces 6 to 10 thousand cubic metres of treated water per day. It is expected to reach the output of 17 thousand cubic metres per day (such volume of treated water is produced by processing 42.5 thousand cubic metres of groundwater per day) in September.

During his visit, the Head of KazMunayGas criticised the contractors for slow implementation of the project stressing its particular social importance.

“The deadline for commissioning the groundwater desalination plant at Karazhanbas has changed due to the coronavirus pandemic and new geopolitical realities. It took project investors and contractors a long time to resolve project-related issues. These problems have now been solved and the plant is up and running. To fulfil the instruction of the Head of State to solve the problem of drinking water shortage, it is necessary to ensure the stable operation of the plant and the planned output of 17,000 cubic meters of treated water,” the Head of KazMunayGas said.

The plant will make the field self-sufficient in terms of water supply. The company used to receive water from the Astrakhan-Mangyshlak water pipeline, now this Volga water will be used to meet the needs of the population.

Background:

Formation (ground) water is treated in settling tanks, further purified through filters and complex ultrafiltration, and then through reverse osmosis. The entire treated groundwater is used by the field for technical purposes reducing its dependence on water consumption from the Astrakhan-Mangyshlak water pipeline. Freed-up Volga water (equal to the amount of treated groundwater) will be used for the needs of the population of Mangistau Region. The facility has an area of 36,000 square metres and a production capacity of 17,000 cubic metres per day. It is currently the largest project of its kind in an oil field in Kazakhstan.

Head of KMG Gives Instructions to Increase Production at Aktau Bitumen Plant of Caspi Bitum

Fri, 29 Jul 2022 09:58:09 +0500

On 29 July, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG), visited JV CASPI BITUM LLP during his business trip to Mangistau Region.

Let us recall that at an extended government meeting on 14 July 2022 President Kassym-Jomart Tokayev called the shortage of road construction materials artificial, stating that “the potential of domestic road bitumen production is not fully reached”.

“Kazakhstan has all the necessary materials for road construction. But the potential of domestic production is not fully exploited. This is an ‘artificial’ shortage. For example, there are three bitumen plants in the country. Nevertheless, there is a shortage of 200,000 tonnes of bitumen,” the President said, calling for the active use of local resources for high-quality road construction.

According to Kazakhstan’s Ministry of Economy, the country will need about 1.1 million tonnes of road bitumen for road construction and repair in 2022.

Caspi Bitum’s Aktau road bitumen plant was commissioned in 2013 with a design annual refining capacity of one million tonnes. Karazhanbas field oil, which is special in its properties, is used in the refining process to produce highest-quality road bitumen, one of the best in the CIS countries. In the past year, the plant was upgraded and its oxidised bitumen production capacity was increased.

The plant produces innovative products such as pre-packaged bitumen in big-bags, which maintains high bitumen quality during transportation and storage, and modified bitumen, which has improved plasticity and resistance to high and low temperatures.

In terms of finished product output, the plant produced more than 400,000 tonnes of bitumen in 2021 and has already shipped about 240,000 tonnes of high-quality road bitumen since the beginning of 2022.

During his visit, the Head of KazMunayGas instructed to speed up the project to increase the plant’s capacity by 1.5 times and to submit this issue to the relevant authorities of LLP and KMG as soon as possible.

“There is now an opportunity to increase the refining capacity of Aktau Bitumen Plant from 1 million to 1.5 million tonnes per year. We have already started developing design and estimate documentation. This project will increase the plant’s bitumen production to 750,000 tonnes per year,” acting General Director Atymtai Baltabayev reported.

M.Mirzagaliyev also instructed to consider further sales of packaged bitumen during the off-season and noted that, when raising the output figures, it is very important to take care of social stability and to improve working conditions and the welfare of workers, raising the social importance of the company in the region.

Background:

The key advantage of packaged bitumen is its ability to retain its original physical/chemical properties by avoiding repeated heating and cooling cycles. It can be operated and stored in all climatic conditions. Bitumen from the Aktau plant was and is used in the construction of virtually all strategic highways of the Republic of Kazakhstan, including the Western Europe – Western China Highway. The plant is also continuously improving its product quality, process flow and business processes. For example, in the spring of 2022, JV Caspi Bitum LLP was certified as compliant with ISO 55001:2014 international management system.

Employees of KPI Inc. Receive Apartment Keys under Subsidized Housing Programme

Fri, 29 Jul 2022 09:57:06 +0500

On 28 July, employees of Kazakhstan Petrochemical Industries Inc. LLP (KPI Inc., KPI) received keys to their new apartments in the French District residential compound in Atyrau. The ceremony was attended by Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, and Daniyar Tiyessov, Chairman of the Management Board of KPI Inc.

The housing programme was launched by KPI to attract and motivate promising employees from among the direct personnel. New housing is available in instalments with no interest or down payment.

“In the near future, we will be launching a large polypropylene production plant in our country. The accumulated experience of employees and continuity are important for its stable operation in the future. Therefore, Samruk-Kazyna Fund, KazMunayGas and KPI have developed a special housing programme and offered new apartments to support and create the necessary conditions for direct personnel,” M. Mirzagaliyev said.

A low-rise residential complex is located on the bank of the Ural River. 1-, 2- and 3-bedroom apartments are available with finishing. The landscaped courtyard has playgrounds, basketball and volleyball courts, and its own boiler house.

During his visit to Atyrau, M. Mirzagaliyev also visited the polypropylene plant construction site of KPI Inc., where he witnessed the progress of propylene polymerization unit, propane and finished product storage facilities (packing and packaging station), central control room and administrative building. The overall progress of the project is now 99.40% and commissioning is being completed at the plant. The plant will have a capacity of 500,000 tonnes of polypropylene per year.

The Chairman of the Management Board also visited the site of the future Butadiene Project. Diaz Diyanov, CEO of Butadiene LLP, presented the status of on-site operations to KMG management.

Let us recall that in November 2021 KazMunayGas and Tatneft established a joint venture to produce butadiene rubbers. The planned annual capacity is up to 66,000 tonnes of butadiene, up to 83,000 tonnes of synthetic rubbers and other products. The preliminary project cost is estimated at $916 million, with a completion date of 2025. Site surveys have been currently completed, and the company has started to design the production facilities and utilities.

Raw materials to produce butadiene rubbers are expected to be supplied from Tengiz and Korolev fields in Kazakhstan. Finished products will be supplied to the tyre factory in Karaganda Region and exported to Europe, Russia, China, Turkey, etc.

The Polypropylene Plant and Butadiene Project are being implemented on the site of the Integrated Gas Chemical Complex.

Head of KazMunayGas visits Third-Generation Plant at Tengiz

Fri, 29 Jul 2022 09:55:34 +0500

On 28 July 2022, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, together with Kevin Lyon, CEO of Tengizchevroil LLP (TCO), visited the facilities of the Future Growth Project – Wellhead Pressure Control Project (FGP/WPCP): Third‑Generation Plant and Combined Production Control Centre (CPC) at Tengiz Field.

“Tengiz is a strategic asset for KazMunayGas, having a significant impact on the development of the economy of the western region and the country as a whole. One of the key objectives today is the timely implementation of FGP/WPCP Project. I would also like to mention the importance of maintaining social stability during the planned large-scale demobilisation of personnel in 2022–2023. We hope that Tengizchevroil will work together with the relevant authorities and local authorities in this matter,” the Head of KMG said.

It should be noted that FGP/WPCP is now 92.2% complete. The project will increase TCO’s oil production by 12 MTPA. In addition, goods, works and services worth $14.1 billion have been purchased from Kazakh companies since the launch of FGP/WPCP. Most of the remaining work will be done domestically, which will create a positive impetus for Kazakhstan’s economy.

Magzum Mirzagaliyev and Kevin Lyon also visited CPC, the largest control centre in the world, where all plants, power grid and field facilities are centrally controlled. The control room located in CPC building has an area of about 2,200 square metres. The centre is equipped with 23 newly designed control consoles.

M. Mirzagaliyev, Head of KazMunayGas, visits Atyrau Refinery

Thu, 28 Jul 2022 09:53:43 +0500

On 28 July 2022, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, visited Atyrau Refinery and inspected the restoration progress.

Atyrau Refinery is gradually starting up its rotating equipment and units.

During his visit to the refinery, M. Mirzagaliyev instructed the company’s management to complete commissioning and start-up as soon as possible, restore equipment and continue supplying oil products to consumers from current stocks. In addition, the Head of KMG stressed the need to take the necessary measures and procedures to further minimise the risk of abnormalities.

“Start-up and commissioning are currently ongoing at the refinery, process units are being gradually restored, and equipment is being cleaned of oil products and catalyst. Around 250 workers are involved in this work around the clock. Today we have 26,000 tonnes of gasoline, 22,000 tonnes of diesel fuel, and 4,000 tonnes of jet fuel in stock. There will be enough gasoline and diesel fuel to ship to consumers for 5–6 days and enough jet fuel for a week,” Murat Dosmuratov, CEO of Atyrau Refinery, reported.

Let us recall that the day before, the refinery suddenly lost power from the off-site grid resulting in an almost complete shutdown of Atyrau Refinery.

Power supply to Atyrau Refinery has now been restored. Feed supply is scheduled to start in the evening of 28 July.

Atyrau Refinery Restores its Power Supply

Thu, 28 Jul 2022 09:52:21 +0500

Power supply to Atyrau Refinery was restored after 10 p.m. on 27 July.

At 11 p.m. on the same day, repair and commissioning were started to determine the operability of equipment at the refinery units that had been shut down due to a power outage.

The process failure is currently being repaired. Feed supply is scheduled to start by the evening of 28 July.

Let us recall that on 27 July Atyrau Refinery experienced power outages leading to its disconnection from KEGOC’s off-site grids. This resulted in an almost complete shutdown of Atyrau Refinery.

In order to prevent an emergency, the refinery’s fuel network was flared according to process regulations until the off-site power grid was fully stabilised.

As of 27 July, the refinery has a stock of: 26,000 tonnes of gasoline, 22,000 tonnes of diesel fuel, and 4,000 tonnes of jet fuel. These resources are shipped to consumers.

Chairman of the Management Board of JSC NC KazMunayGas met with Eurobond holders and institutional investors

Tue, 26 Jul 2022 13:53:35 +0500

Chairman of the Board of JSC NC KazMunayGas (hereinafter - KMG, the Company) Magzum Mirzagaliev held a number of meetings with international institutional investors. The roadshow took place from 18th to 21st July 2022 in the cities of London and New York. Meetings were held with more than 30 major international institutional investors, including current KMG Eurobond holders, among them were Goldman Sachs Asset Management, Fidelity, PIMCO, PGIM, Vanguard and others. KMG's side was also attended by the Chairman of the Board of Directors Christopher Walton, Deputy Chairman of the Management Board for Economics and Finance Dauren Karabaev and other representatives.

Investors were presented with the Company's production and financial results and recent changes in KMG's activities. Along with that, the investment community paid special attention to aspects of ESG development. The Chairman of the KMG Management Board confirmed the Company is committed to sustainable development and global initiatives.

It should be noted that KMG's Eurobond portfolio is represented by 6 notes with a nominal volume of 6.25 billion US dollars. KMG bonds are included in the Emerging Markets Bond Index (EMBI).

Call for Applications to Find Strategic Partner for Joint Implementation of Karaton-Sarkamys Project is Announced Closed

Mon, 25 Jul 2022 09:51:26 +0500

JSC NC “KazMunayGas” announces closing of the call for applications to find a strategic partner for the joint implementation of Karaton-Sarkamys Project.

Let us recall that the search for a strategic partner for joint implementation of the above project was announced on the official website of JSC NC “KazMunayGas” on 22.06.2022.

Announcement of KMG Engineering’s International Scientific Conference

Fri, 22 Jul 2022 09:49:00 +0500

On 16–17 September 2022, KMG Engineering LLP is holding an annual international scientific and practice conference entitled “Prospects of Chemical Enhanced Oil Recovery (CEOR) Methods at the Late Stage of Development”.

The main objectives of the conference are to discuss and share experience, and to jointly identify opportunities and development possibilities for CEOR techniques.

The event will bring together major oil producers and oilfield service companies from Kazakhstan and foreign countries, developers and producers of special-purpose chemicals and equipment for CEOR projects, representatives of research institutes and a number of universities.

Main issues on the agenda:

Experience of applying CEOR at the late stage of field development.
Innovative CEOR techniques at the late stage of field development.

At the end of two days’ work, KMG Engineering plans to publish a collection of proceedings and a number of scientific articles in the Kazakhstan Journal for Oil & Gas Industry.

To participate in the conference, please register at www.kmge.kz by 15 August 2022, and send a research paper, short abstract and application form to the event organisers.

KazMunayGas Announces the Best HSE Innovation and Practice Awards among Employees

Thu, 21 Jul 2022 09:47:21 +0500

JSC NC “KazMunayGas” announces the start of the Best HSE Innovation and Practice Awards in the Group.

To participate in the awards, please fill out an application and send it to annual.hse.award@kmg.kz.

Please note that KMG has committed to decarbonising its operations in 2021, with applications for low-carbon development projects being accepted alongside health, safety and environmental ideas. Ideas, preferably with calculations, on reducing energy and carbon intensity of operations, using renewable energy sources, reducing greenhouse gas emissions are welcome.

Applications will be accepted until 10 October 2022.

Once registered, all applications will be forwarded to the relevant KMG Group companies to begin the screening process.

Ideas will be reviewed by commissions at three levels: level 1 – KMG Group companies, level 2 – KMG’s business units, level 3 – KMG’s top management.

Each application that has received a score of 9 or higher will be reviewed by the next level commission until 3 winning applications are shortlisted.

Key criteria for evaluating ideas:

HSE leadership.
Scalability across all companies of KMG Group: scalability and implementability of the idea/practice.
Added value by reducing the production cost, risks, preventing incidents and avoiding liability for the consequences.

Winners of the third round taking the 1^st, 2^nd and 3^rd places will be awarded as follows:

1^st place – Certificate of Honour and 500 MCIs.

2^nd place – Certificate of Honour and 300 MCIs.

3^rd place – Certificate of Honour and 100 MCIs.

The award ceremony will coincide with Independence Day of the Republic of Kazakhstan.

Application for the Annual Best HSE Innovation and Practice Awards of the Management Board Chairman of JSC NC “KazMunayGas”

General Director Appointed at Atyrau Refinery

Tue, 19 Jul 2022 04:07:24 +0500

In accordance with the Resolution of the General Meeting of Participants, Murat Dosmuratov has been appointed General Director of Atyrau Refinery LLP.

Arman Kairdenov, Deputy Chairman of the Management Board of JSC NC “KazMunayGas” for Oil Refining and Petrochemicals, has introduced the new General Director of Atyrau Refinery to the staff.

KazMunayGas Publishes 2021 Sustainable Development Report

Mon, 18 Jul 2022 03:39:20 +0500

ESG agenda: KEEPING UP WITH GLOBAL CHALLENGES

JSC NC “KazMunayGas” (KMG) annually publishes a Sustainable Development Report. This document is the company’s message about its progress under the United Nations Global Compact and the Company's progress towards the achievement of the global Sustainable Development Goals.

This June, KMG's Board of Directors approved the verified 2021 Sustainable Development Report. The report was prepared in accordance with the GRI Standards, the international reporting standards in the field of sustainable development. It has undergone an independent audit process by Ernst&Young audit firm, as well as the Global Reporting Initiative materiality review - GRI Materiality Disclosures Service.

The Sustainable Development Report discloses the key economic, environmental and social indicators, our initiatives in the occupational health and safety, environmental protection, staff development, and engagement with local communities.

The Report keeps special focus on the new strategic directions of KMG’s development for a ten-year period, disclosure of ESG rating, general approaches and measures to reduce the carbon intensity of the Company's operations.

Recognizing the importance of taking into account the interests of the stakeholders, we organize annual feedback on the Report. This practice will help improve the content of the Report, and promote awareness of the issues of sustainable development among Company's staff and other stakeholders.

Head of KMG Holds Meeting on Implementation of President’s Instructions Regarding Atyrau Refinery’s Operation

Sat, 16 Jul 2022 04:09:07 +0500

On July 15, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, held a meeting on prevention of unscheduled downtime and incidents at oil refineries.

The head of the company, the heads of KMG’s Refinery unit and domestic refineries discussed the implementation of the instructions of the President of the Republic of Kazakhstan, Kassym-Jomart Tokayev, given at an expanded meeting of the Government.

Mr. Mirzagaliyev noted that the refineries’ operations had been repeatedly criticised by the President. At the extended meeting of the Government on 14 July, the Head of State highlighted the problem of oil product shortage in certain periods due to unscheduled downtime at the refineries.

“The refineries’ management should not disclaim responsibility for incidents despite the complexity of the processes and, as in any operations, the ongoing risk of emergency situations. The heads of refineries should keep this issue under constant strict control and, at the slightest risk, immediately take appropriate measures as a priority,” the Head of the company said.

The heads of Atyrau, Shymkent and Pavlodar Refineries reported on measures to prevent incidents and improve reliability of equipment. In addition, the refineries’ management presented an analysis of operation incidents and downtime for 2020–2021 and the first half of 2022 to KMG’s management. According to their data, 401 shutdowns were recorded at all three refineries in 2020–2021: 341 – at Atyrau Refinery, including 60 incidents; POCR – 13, including 10 incidents; PKOP – 47, including 11 incidents. The analysis did not include scheduled shutdowns of the refineries’ units.

Based on the results of the meeting, decisions were taken and recommendations were made to strengthen measures to improve the reliability and stability of the refineries’ operations. In addition, the need to continue improvement of the Procurement Rules for the refineries, and to ensure a guaranteed stock reserve of spare parts and consumables was noted.

For reference:

An incident is an emergency situation due to internal reasons of the enterprise’s operations, which affects average monthly results of the production plan implementation.

IPO Plans of JSC NC “KazMunayGas” Discussed Online

Wed, 13 Jul 2022 04:11:25 +0500

Representatives of Samruk-Kazyna JSC, JSC NC “KazMunayGas” (KMG), the stock market and experts have discussed the future IPO of KMG during the first open online meeting at the Fund’s platform.

The IPO of the country’s largest oil and gas company is planned for this year. The offering will be made on the KASE and AIX stock exchanges.

One of the Samruk-Kazyna Fund’s strategic and priority activities is privatisation of assets and, in particular, the IPOs of the largest portfolio companies.

“Privatisation pursues several goals at once. These include creation of a long-term market value of the Fund’s and the portfolio companies’ assets, improvement of corporate governance standards and operational efficiency, emergence of new sources of funding for the development of the companies, replenishment of the RoK National Fund,” Yernar Zhanadil, Managing Director of Samruk-Kazyna, said.

The shares will be offered in compliance with the national legislation and the stock exchanges’ rules. The final decision on the sale of shares and the offering terms will be made by the Fund’s Board of Directors and the RoK Government. The decision will be based on the recommendations from a consortium of consultants, a preliminary assessment of potential demand and the market conditions. The price of shares will primarily depend on the structure of demand that will develop during the book-building process.

“The shares will be allocated after the book-building is completed, based on the recommendations from investment banks and discussions between KMG and the selling shareholders. In the allocation, priority will be given to retail investors, taking into account the balance of interests of all stakeholders. KMG and Samruk-Kazyna are interested in forming a high-quality and diversified investor base and are committed to a long-term presence on Kazakhstan’s fast-growing stock market,” Dauren Karabayev, Deputy Chairman of KMG’s Management Board, noted.

Dauren Karabayev also said, “The official channels for buying KMG’s shares will be published later, so be careful and do not trust fraudsters’ advertising before the bidding is announced on the official websites of the AIX and KASE stock exchanges, KMG and Samruk-Kazyna, and the authorised channels for the submission of bids are specified.”

During the discussion, the Fund’s representatives and the experts focused on specific issues related to possible risks to a successful IPO. One of such risks is the current situation with oil exports through the CPC pipeline. According to Dauren Karabayev, the company will take all necessary measures to minimise the negative consequences and is also ready to develop alternative transportation routes. Currently, the Atyrau–Samara alternative route as well as the routes to Alashankou and Aktau are available to KMG.

JSC NC “KazMunayGas” is the largest national oil and gas company. Its consolidated assets amounted to USD 31.6 billion by the end of 2021. Oil and gas condensate production is 21.7 million tons, which is about 25% of all production in Kazakhstan. At the end of Q1 2022, the KMG Group’s consolidated debt amounted to USD 8.3 billion, having almost halved over the past five years. EBITDA increased by 39.5% and amounted to USD 971 million in Q1 2022.

The focus on the extraction, refining, transportation and marketing of oil and petroleum products will be maintained, with the key focus remaining on exploration and production of hydrocarbons and provision of the domestic market with petroleum products. This year, KPI’s polypropylene plant will be launched. Preparations for the implementation of the polyethylene and butadiene projects are in progress. The company is committed to the highest ESG and sustainable development standards.

Integrated Gas Chemical Plant Starts Propane Feeding

Mon, 11 Jul 2022 03:25:09 +0500

Kazakhstan Petrochemical Industries Inc. reports completion of the first stage of commissioning operations at the Integrated Gas Chemical Complex (IGCP) near Atyrau.

The plant has started feeding propane to the process units. As early as this week, the company will proceed to the second stage of commissioning – loading the catalyst into propane dehydrogenation reactors. The start of production at the plant is scheduled for August.

The IGCP near Atyrau is going to be the first major project in Kazakhstan’s petrochemical industry.

The plant will produce polypropylene from the Tengiz propane. This is the main raw material for the production of plastic threads, pipes, films, bags, medical and other products.

The plant’s annual capacity will be 500,000 tonnes of polypropylene.

General Director Appointed at Pavlodar Petrochemical Plant

Fri, 08 Jul 2022 03:34:00 +0500

Kuanysh Bishimov has been appointed General Director (Chairman of the Management Board) of Pavlodar Petrochemical Plant LLP by the resolution of the Management Board of JSC NC “KazMunayGas”.

The new CEO of the Pavlodar Plant has been introduced to the team by Dmitry Makeyev, Director for Oil Refining and Petrochemicals of JSC NC “KazMunayGas”.

More Than 20% of KazMunayGas Group’s Staff Revaccinated

Fri, 08 Jul 2022 03:33:18 +0500

Thirteen thousand employees or more than 20% of the total staff of the KazMunayGas Group have been revaccinated against COVID-19. To date, 52.3 thousand employees (80%) have been fully vaccinated (with both doses).

In some entities, the share of those who have had a booster dose exceeds 60%, including KPI Inc. − 61%, Kazakhoil Aktobe − 64%, Caspi Bitum − 72%, Atyrau Oil Refinery − 76%, Kazgermunai − 83%, Pavlodar Petrochemical Plant − 86%.

The successful vaccination campaign held last year has resulted in a herd immunity formed in the KazMunayGas Group. This is one of the key elements for ensuring the health of staff and the smooth operation of KMG’s entities.

“Preventive vaccination continues to be the most well-tested and effective way to protect against infection and reduce the risk of complications in case of disease. To further maintain the herd immunity, we continue our efforts to revaccinate our people,” said Kairat Saktaganov, Director of KMG’s HSE Department.

It should be noted that our company has created all the necessary conditions for revaccination: vaccination posts are arranged on sites and in offices, employees are provided with two additional paid days-off for revaccination.

KMG’s CEO Holds Meeting with Senior Vice President of PETRONAS

Thu, 07 Jul 2022 03:30:08 +0500

On 7 July, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, met with Bacho Pilong, Senior Vice President of PETRONAS, Malaysia’s oil and gas company, and Mohamed Ibrahim Abdul Mutalib, Vice Chancellor / Chief Executive Officer at Universiti Teknologi PETRONAS (UTP). Gulzada Shakulikova, Chairwoman of the Management Board / Rector of S. Utebayev Atyrau University of Oil and Gas, took part in the negotiations as well.

The parties discussed issues of bilateral long-term cooperation in the oil and gas sector.

In addition, during the meeting, UTP’s representatives told about their industry-specific engineering, research and technological programmes and the training of professionals in these disciplines.

In turn, Ms. Shakulikova noted the strategic partnership between the universities and shared the plans to open a UTP branch on the basis of S. Utebayev AUOG.

President Kassym-Jomart Tokayev Receives Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”

Mon, 04 Jul 2022 03:28:57 +0500

The Head of State has been apprised of the petrochemical projects implemented by KazMunayGas. Currently, commissioning is being finalised at the polypropylene plant in Atyrau region. The plant is expected to be launched this August. Furthermore, the President has been made aware of the implementation status of the polyethylene and butadiene production projects.

Mr. Mirzagaliyev has reported on the current status and development outlook of Ozenmunaigas JSC and the efforts being made to maintain social stability in Mangistau region. According to him, a representative office of the national company has been established in Aktau with the mission to address the issues of social and labour relations and receive communications from individuals and legal entities regarding the activities of KazMunayGas’ subsidiaries. In addition, a project is being implemented to improve the quality of education for children in Zhanaozen, and a schoolchildren palace and sports grounds are now under construction.

The CEO of KazMunayGas has also reported on the prospects for development of the company’s foreign assets.

Following the meeting, the Head of State has issued a number of instructions to implement investment projects in a timely manner and continue efforts to maintain social stability.

KazMunayGas to Train up to 1,000 Young Zhanaozen Residents in Top National Schools and Colleges Every Year

Fri, 01 Jul 2022 06:45:27 +0500

In line with the principles of social responsibility, Ozenmunaigas JSC, with the assistance of JSC NC “KazMunayGas” and in cooperation with the government authorities, is launching the Zharqyn Bolashaq (Bright Future) Project to train talented school students from Zhanaozen in the country’s top boarding schools and colleges. Starting from this year, up to 1,000 young residents of Zhanaozen will annually get a unique opportunity to be trained in high-demand occupations in various areas of expertise, from advance hard science classes to development of creative and athletic talents. The project is to be implemented up to 2025. Thus, it is planned to train up to 4,000 school students.

The purpose of Zharqyn Bolashaq is to provide wider access to high-quality education, improve the education quality and help students gain a competitive edge in the labour market.

This year, the project will be launched in two areas: academic mobility of school students and college education in high-demand occupations. It is planned to grant governmental quotas for training in specialised republican boarding schools. Paid training in boarding schools will be provided at the expense of the national company and will cover, among other things, the tuition, accommodation, travelling and other costs.

School students will have the opportunity to participate in the selection process and to be enrolled in boarding schools and technical and vocational education institutions (colleges) of their choice in various cities and regions of Kazakhstan, including IQanat High School of Burabay, a boarding school for talented children in Akmola Region, highly qualified physics and mathematics boarding schools in large RoK cities, sports schools (Olympic Reserve Schools), colleges upgraded under the Zhas Maman (Young Specialists) Programme in large RoK cities, art colleges and Zhas Ulan (Young Men) military schools and colleges. The age of admission to boarding schools and colleges is regulated by the internal rules adopted by educational institutions.

At the same time, educational institutions shall comply with all necessary requirements, including a well-maintained dormitory, catering and medical facilities, qualified student counselling service, etc.

Dedicated committees from partner schools and colleges under the programme will visit Zhanaozen to pre-select children. Educational institution fairs are also planned to give school students and their parents an opportunity to have a look at the curricula.

It should be noted that the list of schools and colleges participating in the programme will be extended in the future. It is also planned to offer jobs in the regions to college alumni.

Test Operation Starts at Karazhanbas Formation Water Desalination Plant

Fri, 01 Jul 2022 06:44:26 +0500

On 1 July, test operation started at the Formation Water Desalination Plant (FWDP) in the Karazhanbas field. This strategic production facility was successfully put into routine operation and now operates according to the process standards. Li Tieqiang, General Director of Karazhanbasmunai JSC (KBM), and Kuanyshbai Nurgaliyev, First Deputy General Director, monitored the full process cycle jointly with the representatives of the Mangistau Region Akimat.

One thousand cubic meters of formation water were subjected to multi-stage filtration and reverse osmosis demineralisation. The chemical tests performed on the samples showed compliance with the quality standards. KBM’s management board emphasised the critical role of the plant in solving the water supply issues and congratulated the project participants on the successful start-up as scheduled.

“Associated formation water desalination and utilisation are a complex and critical process, which helps our company to step it up a notch in terms of technology. Before we start operation at full capacity, we will gradually increase the water supply volumes. It should be noted that this is thanks to the efforts of many specialists who have contributed their knowledge and experience to this production process,” KBM’s management noted.

The production start-up has a multiplier effect in many areas. Apart from water supply, the plant facilitates the solutions to KBM’s various process issues, such as production increase, reduction of well workovers and interventions and reduction of cratering blow-out volumes.

Chairman of KazMunayGas Management Board and President of Transneft Discuss Oil Transportation Cooperation

Fri, 01 Jul 2022 06:43:32 +0500

On 30 June 2022, Magzum Mirzagaliyev, Chairman of JSC NC “KazMunayGas” (KMG) Management Board, held a meeting with Nikolai Tokarev, President of Transneft PJSC, in Moscow.

The parties discussed the relevant issues regarding Caspian Pipeline Consortium’s (CPC) operations on Kazakh oil transportation. The critical role of the CPC project for the strategic partnership between Kazakhstan and Russia was emphasised. Mr. Mirzagaliyev noted that Transneft was KMG’s long-term and reliable partner in Kazakh oil transportation and transit.

The meeting was specifically focused on the current situation at CPC’s offshore terminal due to the mine clearing operations performed on extremely dangerous objects near SPM-1 and SPM-2 single point moorings.

The Russian Ministry of Emergency Situations has been performing additional inspection and disposal of potentially dangerous underwater objects in the offshore area near SPM-1 and SPM-2 since 15 June of this year. SPM-3 operates normally. The mine clearing operations were initially scheduled to be completed before 25 June. However, due to adverse weather conditions, the operations were extended to 5 July of this year.

During the meeting, the parties were informed that the mine clearing operations near SPM-2 were close to completion, and the oil pipeline would operate using two SPMs starting from 1 July. The additional inspection and mine clearing operations in the offshore area near SPM-1 are scheduled to be completed before 5 July 2022.

The Heads of KMG and Transneft noted that in these conditions CPC ensured uninterrupted export of Kazakh oil according to the consignors’ schedules.

After discussing the progress of the mine clearing operations near SPM-1 and SPM-2, Mr. Mirzagaliyev and Mr. Tokarev expressed their hope that the operations would be completed according to the schedule and reinforced the significance of stable operation of all three single point moorings (SPM-1, 2, 3).

The Heads of KMG and Transneft emphasised their satisfaction with the evolving relations between the companies in all areas of joint operations and stated that the cooperation between the parties was progressing in the spirit of mutual understanding and partnership.

For reference:

CPC JSC’s Shareholders: Russian Federation (Transneft PJSC) — 31%, JSC NC “KazMunayGas” — 20.75%, Chevron — 15%, Lukoil — 12.5%, ExxonMobil — 7.5%, Rosneft Shell — 7.5%, Shell — 3.75%, ENI — 2%.

KazMunayGas Helps Unemployed Residents of Mangistau Region Get Jobs in Tatneft

Thu, 30 Jun 2022 06:50:42 +0500

In order to maintain social stability in its region of operation, JSC NC “KazMunayGas” jointly with the Mangistau Region Akimat and Tatneft PJSC continue their efforts to hire unemployed residents of the region for Tatneft’s projects in the Republic of Tatarstan.

It should be noted that the meetings with the region’s residents, including Zhanaozen residents, have already been held with the participation of Tatneft’s representatives. During the meetings, jobs were offered and employment conditions were explained to those interested.

Tatneft is ready to offer jobs to more than 500 persons, including drillers and assistant drillers for development and exploration well drilling and well workover, machine operators, fitters, electric welders, drivers and other workers.

Moreover, Tatneft will arrange transportation to the workplace from Uralsk and Aktobe, provide dormitories, hold the necessary training and re-training.

The proposed rotational work option is one month on rotation and one month off rotation. The employees will be paid competitive remuneration. For instance, the average remuneration is 78,500 roubles in well drilling and workover, 52,500 roubles in mechanical equipment repair and 55,000 roubles for drivers. It should be noted that the average remuneration includes the remuneration for the on-rotation period and the payment for the off-rotation period.

To date, more than 500 candidates from various districts and cities of Mangistau Region have filed applications, out of which 178 persons have passed the selection process.

At the same time, more applications are being accepted from unemployed residents. According to the Mangistau Region Employment and Social Programme Coordination Department, 170 more persons expressed their willingness to be employed. The second candidate selection stage will take place in mid-July.

The candidate selection and testing procedure is performed by Tatneft’s representatives in Aktau.

It should be noted that this is not the only initiative by KMG to maintain social stability in its region of operation. To date, under the Mangistau Region Integrated Social and Economic Development Plan for 2021-2025, 22 projects and events worth 425 billion tenge are planned with the participation of the national company. These cover the actions to support the Group’s companies and their contractors, implement investment projects and create new jobs, as well as fund social projects.

KazMunayGas Participates in Samruk-Kazyna’s First Annual Health and Safety Forum

Wed, 29 Jun 2022 06:54:08 +0500

The Samruk-Kazyna Fund has arranged the first Health and Safety Forum in Nur-Sultan to share experience and best practices, review the existing challenges and create a new large expert platform in the area of health and safety.

The speakers included representatives of governmental authorities, top managers of the Samruk-Kazyna JSC Group’s production companies, international organisations and independent experts.

Almassadam Satkaliyev, Chairman of Samruk-Kazyna’s Management Board, welcomed the guests of the forum and shared the outcomes of the efforts currently made by the Fund’s Group in occupational health and safety. He also told about the challenges for 2022-2026.

“Samruk-Kazyna is Kazakhstan’s largest employer. The Group’s headcount exceeds 250,000 employees, with the share of production personnel making up 92.4%. It should be noted that over the years, the Fund has been putting its efforts and resources into promoting the safe production values and approaches. However, we are still a long way off from our goal of zero injury at our facilities. At the end of the year, we will discuss the performance shown by chief executive officers in occupational safety at the meeting of the Boards of Directors of the corresponding companies. The safety of the people employed at the facilities is a core value for me personally and for the Fund as a whole, and I would like all the attendees to know that I personally monitor every accident,” Mr. Satkaliyev emphasised.

Top managers of 13 large companies in the Fund’s Group also signed their personal H&S commitments during the forum. The managers undertook to lead by example and demonstrate commitment to the safety values, ensure adoption of the best safety practices in their companies and create safe working conditions for their employees. The commitments were signed by the managers of such companies as JSC NC “KazMunayGas”, NAC Kazatomprom JSC, NC Kazakhstan Temir Zholy JSC, QazaqGaz JSC, KEGOC JSC, Samruk-Energo JSC, Kazakhtelecom JSC, Kazpost JSC, Air Astana JSC, Qazaq Air JSC, NMC Tau-Ken Samruk JSC, Samruk-Kazyna Ondeu JSC, Samruk-Kazyna Construction JSC.

The representatives of international organisations and companies participated in the forum by sharing the information on global safety accomplishments. The speakers at the forum included the experts from ORP (International Occupational Risk Prevention Foundation), EBRD (European Bank of Reconstruction and Development), EVERYCO Central Asia Kazakhstan, IOSH (Institution of Occupational Safety and Health), NEBOSH (UK’s National Examination Board in Occupational Safety and Health), OPITO, etc.

The Fund’s representatives noted the reduction of the lost time injury rate in production companies by 24% over the last four years. In absolute terms, the number of injuries has reduced by 35%, from 165 in 2018 to 108 in 2021.

In order to monitor the occupational health and safety status, the Fund and the portfolio companies make active efforts to ensure process automation and digitalisation as well as personnel training. Some of the portfolio companies have already implemented the IT solutions to ensure sufficient reporting transparency and communication development and other solutions to facilitate hazard identification and risk management.

These efforts help the Fund to proactively respond to the portfolio companies’ activities by predicting the situation and planning the corresponding actions in advance to achieve the common occupational safety goals. An important development driver is that 2022 was declared the Year of Safety in the Samruk-Kazyna Group.

Chairman of KMG’s Management Board Holds Meeting with Head of TotalEnergies in Kazakhstan

Wed, 29 Jun 2022 06:52:47 +0500

On 29 June, Magzum Mirzagaliyev, Chairman of JSC NC “KazMunayGas” Management Board, held a meeting with Ahlem Friga-Noy, TotalEnergies Country Chair in Kazakhstan.

Mr. Mirzagaliyev awarded a Medal for Contribution to Oil and Gas Industry Development to Ms. Ahlem Friga-Noy on behalf of the RoK Ministry of Energy and expressed gratitude for her efficient work over the years of cooperation and her contribution to the development of the national oil and gas industry.

“Over the years of your work in Kazakhstan, you have supported the improvement of the business climate and implementation of the projects that are critical for our country. I am certain that your expertise will continue to be the key to your successful professional activities,” Mr. Mirzagaliyev emphasised.

It should be noted that due to rotation, Ms. Ahlem Friga-Noy is to resign as TotalEnergies Country Chair in Kazakhstan.

KazMunayGas Opens Representative Office in Aktau

Thu, 23 Jun 2022 03:12:40 +0500

On 23 June, JSC NC “KazMunayGas” opened a Representative Office in Aktau.

Magzum Mirzagaliyev, Chairman of JSC NC “KazMunayGas” Management Board, attended the Representative Office opening ceremony. Kurmangazy Iskaziyev, Deputy Chairman of KMG’s Management Board for Exploration and Production, was appointed as Head of KMG’s Representative Office. KMG’s Office will supervise the company’s activities in the Western region as listed below:

Interfaces with local executive and central governmental authorities, trade unions of KMG’s subsidiaries and contractors,
Coordination of public employment projects,
Supervision over production programs, target performance indicators and field development,
Coordination of the Common Remuneration System and HR activities at KMG’s subsidiaries,
Acceptance of reports submitted by individuals and legal entities regarding the activities of KMG’s subsidiaries, etc.

“We currently implement a number of initiatives in Mangistau Region to improve the social well-being of the local community, and also manage the investment projects to increase the oil and gas reserves and production rates. The office in Aktau will be in charge of important tasks, so the opening of the Representative Office in this region and the company’s top managers and specialists based in this Office will help promptly and efficiently address all production and social issues,” noted Mr. Mirzagaliyev.

The Representative Office will be located in the building of NMSC Kazmortransflot LLP, a KMG subsidiary.

During his business trip to Mangistau Region, KMG’s Head also visited the formation water desalination plant at the Karazhanbas field, which will be put in operation in the near future. The plant will ensure desalination of associated formation water. Karazhanbasmunai JSC will be able to cover its own production and household water needs and will reroute the free water volumes previously supplied from the Astrakhan – Mangyshlak water trunkline to the region’s population.

Mr. Mirzagaliyev noted that the projects intended to supply potable water to the region’s population are specially controlled by Kazakhstan President Kassym-Zhomart Tokayev and KMG is partly responsible for fulfilling the assigned tasks. The company also plans to build a sea water desalination plant in the village of Kenderli and to upgrade and extend the Astrakhan – Mangyshlak water pipeline.

During his business trip, the Chairman of the Management Board also visited the production facilities of Ozenmunaigas JSC, KazGPP LLP and Mangistaumunaigas JSC. The heads of the subsidiaries updated Mr. Mirzagaliyev on the current progress of KMG’s social projects and activities in the region implemented under the Mangistau Region Integrated Social and Economic Development Plan for 2021 to 2025 (IDP).

Twenty-two projects and activities involving KMG are planned in the region under the IDP for a total of 425 billion tenge. Among them are the activities to maintain social stability at the Group’s enterprises and their contractors, to implement investment projects and create new jobs, as well as to finance social projects.

For reference:

The Mangistau Region Integrated Social and Economic Development Plan for 2021 to 2025 was approved by the RK Government Resolution in November 2021.

Eighteen enterprises of JSC NC “KazMunayGas” operate in Mangistau Region; their total headcount is over 32.5 thousand people, or approximately 52% of the KMG Group’s employees. The region’s share in KMG’s total oil production is 43%.

Announcement on a search by JSC NC “KazMunayGas” of a strategic partner for joint implementation of the Karaton-Sarkamys project

Wed, 22 Jun 2022 12:36:02 +0500

JSC NC “KazMunayGas” is looking for a strategic partner for joint implementation of Karaton-Sarkamys, a new subsoil use project.

Title of the new subsoil use project (subsoil area): Karaton-Sarkamys.

Location of the subsoil area: Atyrau, Mangistau Region. The subsoil area is included in the State Subsoil Fund Management Programme where its coordinates are indicated, and is on the List of subsoil areas intended for hydrocarbon exploration and production or hydrocarbon production to grant subsoil use licenses to national companies. More information.

Requirements for legal entities (a consortium of legal entities) that establish criteria to select a strategic partner for JSC NC “KazMunayGas” for the purpose of investment financing of the Karaton-Sarkamys project to further obtain a subsoil use right (hereinafter — the Requirements):

“Organisation” means a Kazakh or foreign legal entity (associations thereof).

“Parent Company” means a legal entity that directly or indirectly owns 100% participation interest (blocks of shares) in the Organisation.

Proof of state registration as a legal entity (an extract from the commercial register or other legalised document certifying that the applicant is a legal entity under the laws of a foreign state).
The Organisation should not be in process of liquidation, reorganisation or bankruptcy.
The Organisation should have no outstanding tax liabilities or other obligatory payments to the national budget.
The Organisation or its Parent Company should have a good track record of subsoil use operations in Kazakhstan and/or abroad:

- 10+ years of experience in commercial production of hydrocarbons; and

- 5+ years of experience in geological exploration (seismic exploration and exploratory drilling); and

- 5+ years of experience in work programme implementation.

Availability of skilled professionals (management) in the Organisation or its Parent Company with 10+ (ten+) years of experience in the oil and gas industry.
The Organisation’s equity should be minimum 200,000,000 (two hundred million) U.S. dollars.
If the Organisation or its Parent Company is on the Forbes list of the World’s Largest Public Oil and Gas Companies (Oil & Gas Operations) (https://www.forbes.com/global2000/list/), Paragraphs 4, 5 and 6 of the Requirements shall not apply.
The Organisation shall commit to provide investment financing for exploration operations under a joint activity agreement (contract) and/or a financing agreement signed to obtain the subsoil use right through direct negotiations in the manner established by the Subsoil and Subsoil Use Code of the Republic of Kazakhstan.
The Organisation shall commit to pay the signature bonus or reimburse the amount of the signature bonus paid by JSC NC “KazMunayGas”.
Information on managers, legal entities, individuals, states and international organisations that directly or indirectly control the strategic partner.
Information on previous activities of the strategic partner, including a list of countries in which it has operated for the last three years.
Proof of availability of sufficient funds to carry out a work programme containing the scope, description and deadlines for the work during the exploration period.

List of documents to be provided by the Organisations to confirm compliance with the Requirements:

A copy of the certificate (statement or other document) of state registration (re-registration) of a legal entity, an extract from the commercial register or another document certifying that the applicant is a legal entity under the laws of a foreign state, for a temporary association of legal entities (consortium) — a copy of the consortium agreement and copies of certificates (statements or other documents) of state registration (re-registration) of the consortium members.
A copy of the Charter/Articles of Association duly approved, for legal entities registered on the basis of a standard Charter/Articles of Association — a copy of the statement of the established form for registration of a legal entity.
Written information on managers and their powers, members (shareholders) indicating the size of their participation interests (blocks of shares), information on legal entities, individuals, states and international organisations that directly or indirectly control the applicant, information on trading in securities of a legal entity on the established securities market with the total number of such securities indicated, information on subsidiaries.
Information on previous activities, including the list of countries where the Organisation has operated for the last three years.
Number and date of the subsoil use contract or other agreement under which the Organisation is conducting or has conducted exploration/subsoil use operations.
List of key employees (management) of the Organisation who have 10+ (ten+) years of experience in the oil and gas industry, CVs of these employees of the Organisation.
Copies of audit reports for the period of 2019–2021 and a confirmation letter from an audit company on the financial position of the Organisation.
If the Organisation or its Parent Company is on the Forbes list of the World’s Largest Public Oil and Gas Companies (Oil & Gas Operations), a letter from the Organisation or its Parent Company with a proof link to the information resource specified in Paragraph 7 of the Requirements.
Written confirmation by the Organisation that all the information provided in the documents is true.

All the documents shall be in Kazakh and Russian. Where the documents are provided by a foreign legal entity, such documents may be issued in another language with obligatory notarised translation of the document into the Kazakh and Russian languages attached to each document.

Minimum requirements for the form of cooperation:

Cooperation on a Joint Venture basis.
The share of JSC NC “KazMunayGas” in the project shall be 50%.
The minimum work programme shall include drilling of 1 (one) exploratory well 5,500 (five thousand five hundred) meters deep.

The procedure and deadline for the Organisations to submit applications for joint implementation of Karaton-Sarkamys, the new subsoil use project:

Applications from Organisations with enclosed documents to confirm compliance with the Requirements for applicants shall be submitted within 30 (thirty) calendar days following the date of announcement on the search for a strategic partner for joint implementation of Karaton-Sarkamys, the new subsoil use project.

Address of JSC NC “KazMunayGas”: 8 D. Kunayev Street, Block B, Emerald Quarter Administrative Building, Yessil District, Nur-Sultan, 010000, Republic of Kazakhstan

Conditions and procedure for selecting a strategic partner for joint implementation of the Karaton-Sarkamys project:

After 30 (thirty) calendar days from the date of this announcement, the application submission period shall be closed and a relevant notice shall be posted on the corporate website of JSC NC “KazMunayGas” — www.kmg.kz.

JSC NC “KazMunayGas” will review the applications with enclosed documents submitted by Organisations before the established deadline for compliance with the Requirements.

If Paragraph 7 of the Requirements is not complied with, the Organisation or its Parent Company shall provide a security deposit of $500,000 (five hundred thousand U.S. dollars) to participate in the procedure for determining the Strategic Partner for the Karaton-Sarkamys project, and use an escrow account or provide a bank guarantee or a guarantee of the Parent Company/Affiliate (adequately solvent) to secure the funding commitments under the Karaton-Sarkamys project. The security deposit paid for participation shall be returned to the Organisation once the strategic partner determination process is completed or the search for a strategic partner is declared failed.

Bank details of JSC NC “KazMunayGas”

Account Name: JSC NC “KazMunayGas”

BIN 020240000555

Bank: Halyk Bank of Kazakhstan JSC

Account number (USD): KZ406010111000002040

Account number (KZT): KZ356010111000002033

Swift: HSBKKZKX

Beneficiary code 16

The list of Organisations that meet the Requirements shall be posted on the corporate website of JSC NC “KazMunayGas” — www.kmg.kz.

KazMunayGas will send a memorandum of understanding and a confidentiality agreement for signature to the Organisations that meet the Requirements. These documents determine the further procedure for engaging and determining a strategic partner for joint implementation of Karaton-Sarkamys, the new subsoil use project.

This announcement was posted on the corporate website of JSC NC “KazMunayGas” on 22 of june 2022.

KazMunayGas and Tatneft Sign Agreement of Intent on Karaton-Sarkamys Project

Fri, 17 Jun 2022 03:14:48 +0500

JSC NC “KazMunayGas” and Tatneft PJSC signed the Agreement of Intent on joint implementation of the Karaton-Sarkamys Project in Atyrau Region.

The agreement confirms the intention of KazMunayGas and Tatneft to cooperate for implementation of the Karaton-Sarkamys Prospecting and Exploration Project. The document was signed by Magzum Mirzagaliyev, Chairman of KMG’s Management Board, and Nail Maganov, Tatneft’s General Director, on 17 June in Saint Petersburg (Russian Federation) during the Saint Petersburg International Economic Forum. The signing ceremony was attended by Kazakhstan President Kassym-Zhomart Tokayev and Tatarstan President Rustam Minnikhanov.

If hydrocarbons are discovered, KMG’s resource base and subsequent production are expected to increase.

“We welcome Tatneft’s intention to act as KMG’s strategic partner under the Karaton-Sarkamys Project. Tatneft is one of the key partners for KazMunayGas. We actively develop our cooperation in various areas, which range from supplies of goods and equipment to management of oil recovery improvement at mature fields,” Mr. Mirzagaliyev noted during the signing of the Agreement.

“KazMunayGas and Tatneft have a long history of friendly partnership. We cooperate in a wide variety of areas. I am certain that our company’s technologies and competences in prospecting and exploration will help to successfully develop fields in Kazakhstan,” said Nail Maganov, Tatneft’s General Director.

For reference:

The Karaton-Sarkamys subsoil area is located in Atyrau Region next to such operating fields as Tengiz and Korolevskoye and a group of Embamunaigas fields.

In February 2022, Karaton-Sarkamys was included in the list of subsoil areas subject to hydrocarbons exploration and production, for which the subsoil use right will be granted to JSC NC “KazMunayGas”.

KazMunayGas and LUKOIL Enhance Partnership

Fri, 17 Jun 2022 03:13:35 +0500

On 16 June 2022, during the Saint Petersburg International Economic Forum (PIEF), Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG), and Vadim Vorobyov, President of LUKOIL PJSC (LUKOIL), signed Supplementary Agreement No. 1 to the Kalamkas-Offshore and Khazar Project Principles Agreement.

The document sets out the selection activities for field development concept and the commercial terms for joint implementation of the project.

“Signing of this agreement is an important milestone for all its parties, which will definitely boost the development of cooperation between our companies. I am certain that all our future plans will be implemented through joint efforts,” noted Mr. Mirzagaliyev, Head of KMG.

Moreover, a trilateral meeting took place during the PIEF with the participation of Almassadam Satkaliyev, Chairman of the Management Board of Samruk-Kazyna JSC, Magzum Mirzagaliyev, Head of KMG, and Vadim Vorobyov, President of LUKOIL PJSC. During the negotiations, the parties discussed the progress under the ongoing projects and the further cooperation areas.

Let us recall that on 16 November 2021, KMG and LUKOIL signed the Kalamkas-Offshore and Khazar Project Principles Agreement, which sets out the concept, details and terms for the joint field development.

For reference:

The Kalamkas-Offshore, Khazar and Auezov fields are located in the Kazakh Sector of the Caspian Sea.

The distance to the shore is 60 km. The water depth is 7 to 9 m.

Transaction Completed on Acquisition of Interest in Kazakhstan Petrochemical Industries Inc.

Wed, 15 Jun 2022 03:18:09 +0500

On 13 June 2022, JSC NC “KazMunayGas” (KMG) completed the transaction on acquisition of the 49.5% interest in Kazakhstan Petrochemical Industries Inc. LLP (KPI Inc.) from Samruk-Kazyna JSC.

Let us note that in June 2018, KPI Inc. was placed under KMG’s trust management.

KPI Inc. is implementing the polypropylene production plant construction project in Atyrau Region. The plant is intended to export its products to be sold on the RK’s domestic market. The plant’s design capacity is 500 thousand tonnes of polypropylene per year.

Head of KMG Visits SIBUR’s Operating Production Facilities

Mon, 13 Jun 2022 03:19:40 +0500

On 10 June, the delegation of JSC NC “KazMunayGas” led by Magzum Mirzagaliyev, Chairman of the Management Board, visited one of the largest petrochemical complexes in Russia and worldwide, i.e. ZapSibNeftekhim LLC (SIBUR Holding Group’s petrochemical plant) located in Tobolsk.

During the visit, the guests were shown ZapSibNeftekhim’s new production facilities; their aggregate capacity is rated for production of 2.5 million tonnes of base polymers per year (1.5 million tonnes of polyethylene and 1 million tonnes of polypropylene). KMG’s delegation visited the pyrolysis, polyethylene and polypropylene units and the central control room, where the adopted digital tools were demonstrated to the management.

Then the delegation went to see the monomer production facilities, including the maleic anhydride production unit, the propane dehydration unit, the natural gas liquids processing unit and the common control room.

KMG’s delegation also visited the SIBURINTECH Centre for the Development of Engineering and Technical Expertise.

After the visit, the heads of KMG, SIBUR and Sinopec held a work meeting (via video conference). During the meeting, the participants discussed the potential cooperation between the companies and the prospects for joint implementation of petrochemical projects.

It should be noted that SIBUR is Russia’s largest producer of polypropylene, low pressure polyethylene, BOPP film, polyethyleneterephthalate, monoethyleneglycol, expandable polystyrene and thermoplastic elastomers and ranks among the world’s top five companies in polyolefins (plastic) production.

Let us recall that on 7 October 2021, Samruk-Kazyna JSC, KMG and SIBUR signed the agreement that sets out the basic cooperation terms under the polyethylene production plant and polypropylene production plant construction projects.

RoK Ministry of Energy, Samruk-Kazyna, KazMunayGas and Total Eren S.A sign Agreement in Principle

Thu, 09 Jun 2022 10:36:37 +0500

On 9 June 2022, the Ministry of Energy of the Republic of Kazakhstan, Samruk-Kazyna JSC, JSC NC “KazMunayGas” and Total Eren S.A entered into the Agreement in Principle under the project for the construction of a 1 GW wind power plant (WPP) in Zhambyl region.

The Agreement was signed as a result of work performed under the previously signed Memorandum of Understanding between the said parties as of 28 October 2021.

The Agreement provides for the location to construct the 1 GW wind power plant with an energy storage system (capacity of at least 100 MW/200 MWh) near the village of Mirny in Zhambyl region. Certain actions to be taken by the Parties to implement the project were also determined.

The WPP project will be implemented in stages. The project is scheduled for completion between 2024 and 2026.

In addition to the above, the Parties are going to establish a Centre of Excellence in the operation of large RES facilities and electricity storage systems in Kazakhstan to train local specialists.

Cooperation between KazMunayGas, TotalEnergies EP Kazakhstan and Samruk-Kazyna is part of the companies’ efforts to support Kazakhstan’s goals to achieve net zero by 2060, and will make it possible for KazMunayGas to achieve its strategic goal by 2031 to implement renewable energy projects with a total capacity of at least 300 MW.

KMG and ExxonMobil discuss joint operations at Tengiz and Kashagan

Wed, 08 Jun 2022 10:39:17 +0500

Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, has met with Neil Chapman, Senior Vice President of ExxonMobil.

Mr. Mirzagaliyev thanked Neil Chapman and ExxonMobil for the long-term cooperation with KMG. During the meeting, the parties discussed the implementation of the Future Growth Project — Wellhead Pressure Management Project (FGP–WPMP) at the Tengiz field. KMG’s leader stressed the particular importance of meeting the deadline for completing the FGP for the government of the Republic of Kazakhstan and the company. He also focused on preserving the social stability during the planned large-scale demobilisation of FGP–WPMP personnel in 2022–2023. KMG is looking forward to working closely with Tengizchevroil LLP on this issue.

On top of that, Mr. Mirzagaliyev touched upon the further development of the Tengiz field beyond the contract period (after 2033) and suggested exploring various options to maintain oil production in the future.

The parties dwelled particularly on the issue of joint operations at the Kashagan field (North Caspian project). The Chairman of the Management Board recalled that a concept for subsequent stages of field development needed to be selected in accordance with the development strategy for the entire ‘life cycle’ (beyond 2041).

Joint efforts to further increase the Kazakh content in the North Caspian project and ensure training and nationalisation of technical and managerial personnel were also discussed during the meeting.

KazMunayGas and EBRD sign Memorandum of Understanding

Wed, 08 Jun 2022 04:27:18 +0500

On 8 June, JSC NC “KazMunayGas” (KMG) and the European Bank for Reconstruction and Development (EBRD) signed the Memorandum of Understanding on strategic cooperation in the field of decarbonisation. The cooperation is aimed at supporting KMG in reducing its carbon footprint as part of the implementation and improvement of the effectiveness of the approved KMG Low-Carbon Development Programme.

The parties’ efforts will focus on improving KMG’s reporting capacity in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), as well as on analysing the potential and opportunities for financing low-carbon projects to improve energy efficiency, renewable energy development, implementation of low-carbon hydrogen and carbon capture and storage pilot projects.

The memorandum was signed on the eve of the 34th Plenary Session of the Foreign Investors Council devoted to “Decarbonising the Economy. Implementing Low-Carbon Technologies to Meet Environmental, Social and Governance (ESG) Standards.” The signing ceremony was attended by Magzum Mirzagaliyev, Chairman of KMG’s Management Board, and Huseyin Ozkan, Director, Head of Kazakhstan at EBRD.

“We are pleased to start a new chapter in cooperation with our long-standing strategic partner, the European Bank for Reconstruction and Development. At the UN Climate Ambition Summit, President Kassym-Jomart Tokayev made a statement about Kazakhstan’s intention to achieve net zero by 2060. As is known, KazMunayGas has set a goal to reduce its carbon footprint by 15% by 2031 against the 2019 level. We consider the memorandum in the context of completing this task and hope that joint efforts with the EBRD will help strengthen our competencies and achieve a low-carbon future in Kazakhstan,” KMG’s CEO Magzum Mirzagaliyev emphasised.

“The vast majority of states, including Kazakhstan, have agreed to accelerate work towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change. Sustainable development, decarbonisation, and renewable energy are no longer buzzwords but a way of thinking. I am really pleased that KazMunayGas is part of this global green movement and will cooperate with the EBRD in implementing the low-carbon development programme,” Huseyin Ozkan, Director, Head of Kazakhstan at EBRD, said.

Chevron and KazMunayGas announce collaboration on lower carbon opportunities

Wed, 08 Jun 2022 04:19:46 +0500

JSC NC “KazMunayGas” (KMG) and Chevron Corporation (NYSE: CVX), through its subsidiary Chevron Munaigas Inc. (Chevron), have announced a memorandum of understanding (MoU) to explore potential lower carbon business opportunities in Kazakhstan.

KMG and Chevron plan to evaluate the potential for lower carbon projects in areas such as carbon capture, utilization, and storage (CCUS); hydrogen; energy efficiency and methane management; and carbon financial disclosure methodology.

The MoU was signed by Derek Magness, Managing Director for Chevron’s Eurasian Business Unit, and Magzum Mirzagaliyev, Chairman of the Management Board of KMG in Nur-Sultan on the eve of the 34th Plenary session of the Foreign Investors Council chaired by President of Kazakhstan Kassym-Jomart Tokayev and Chevron’s Executive Vice President of Upstream Jay Johnson.

“At the UN Climate Ambition Summit, President Kassym-Jomart Tokayev made a statement about Kazakhstan's intention to achieve carbon neutrality by 2060. KazMunayGas, in its turn, has set a goal to reduce its carbon footprint by 15 percent by 2031 compared to 2019 level and is going to take further actions under the Paris Agreement and Kazakhstan’s Doctrine of Carbon Neutral Development. However, lower carbon is a new area for us, and we believe that Chevron’s wide experience in implementing lower carbon technologies and practices in oil and gas industry will contribute to our capabilities and lead to joint lower carbon projects. We highly appreciate the partnership that has developed over the years of Chevron’s presence in our country,” Mirzagaliyev said.

“Chevron has been investing in Kazakhstan for close to three decades. We are proud of our history of partnership and are committed to investing in the country’s energy future. This MoU with KazMunayGas marks a new chapter in our company’s efforts to support the development of Kazakhstan’s energy sector,” Magness said. “We firmly believe that we can play an important role in the country’s energy transition and achievement of its carbon-reduction targets. Through our collaboration with KMG, we hope to contribute to providing affordable, reliable, ever-cleaner energy, and help the industries and customers who use our products to advance their lower carbon goals.”

“Chevron knows the future of energy is lower carbon and achieving the global net zero ambitions of the Paris Agreement will require partnership and collaboration,” said Jeff Gustavson, president of Chevron New Energies, which was launched in 2021 to focus on establishing lower carbon businesses in CCUS, hydrogen, renewable fuels, offsets, and other emerging areas. “We are excited about the opportunity to pursue these lower carbon opportunities with KazMunayGas and help advance the energy transition in Kazakhstan.”

The collaboration between Chevron and KMG is part of the efforts from both companies to support Kazakhstan’s target vision to achieve carbon neutrality by 2060.

KMG’s CEO checks on pre-commissioning of polypropylene plant in Atyrau region

Tue, 07 Jun 2022 11:09:40 +0500

On 7 June, Magzum Mirzagaliyev, Chairman of KMG’s Management Board, visited the integrated gas chemical complex (IGCC) under construction for the production of polypropylene in Atyrau region.

Mr. Mirzagaliyev checked on the progress of IGCC pre-commissioning and visited the main facilities of the complex, specifically, the propane tank farm, propane dehydrogenation and propylene polymerisation unit, finished product storage warehouse, central plant laboratory and central control room.

During the visit, KMG’s leader noted the significant progress of the project.

“The project for the construction of the integrated gas chemical complex is under special control by the Head of State and the Government as well as under close public scrutiny,” Mr. Mirzagaliyev said during a working meeting at KPI LLP.

Currently, the overall progress of the IGCC project is 99.20%. The main construction works have been completed, site improvement is underway.

The 500-thousand ton polypropylene production complex will be KMG’s flagship project and will make it possible for the company to carry out higher-level hydrocarbon processing. The project operator is KPI Inc.

On top of that, Mr. Mirzagaliyev visited the Atyrau Refinery (AR) during the trip. The enterprise leaders presented current results of the Tazalyq project. The project involves upgrade of the refinery’s wastewater treatment units, and reclamation of 860 ha of evaporation fields. The Chairman of the Management Board was informed that as of today the first-phase construction-and-assembly works on the wastewater treatment units had been finished by 73%. The project is scheduled for completion in December 2023.

The business trip ended with a working meeting held in the office of Embamunaigas JSC (EMG). EMG’s management provided KMG’s leader with the results of integrating the Digital Oil Field system into their operations. The project provides real-time monitoring of processes at sites (production management, transport monitoring, effective use of special equipment, etc.).

JSC NC KazMunayGas announces financial results for the first quarter of 2022

Tue, 07 Jun 2022 04:31:39 +0500

Joint-stock (JSC) National Company (NC) KazMunayGas (“KMG” or Company), Kazakhstan's national vertically integrated oil and gas company, published its interim condensed consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) 34 "Interim Financial Statements" for the three months ended on March 31, 2022, with a report on the results of the review of interim financial information by an independent auditor.

Key financial indicators for the first quarter of 2022^[1]:

Revenue for the first quarter of 2022 increased by 64.1% and amounted to 1,957 bln tenge (USD 4,279 mln) compared to 1,192 bln tenge (USD 2,840 mln) in the first quarter of 2021;
EBITDA increased by 39.5% to 444 bln tenge (USD 971 mln) compared to 318 bln tenge (USD 758 mln) in the first quarter of 2021;
The Company's net profit in the reporting period increased by 0.5% and amounted to 287 bln tenge (USD 628 mln). Net profit for the period attributable to the shareholders of the parent company amounted to 312 bln tenge (USD 682 mln);
FCF amounted to -40 bln tenge (USD -88 mln), compared to 35 bln tenge (USD 83 mln) in the first qiarter of 2021;
Total debt as of March 31, 2022 increased by 3.5% and amounted to 3,878 bln tenge (USD 8,317 mln) compared to the indicator as of December 31, 2021 in the amount of 3,746 bln tenge (USD 8,676 mln);
The Company's net debt as of March 31, 2022 amounted to 2,189 bln tenge (USD 4,694 mln) to the indicator as of December 31, 2021 in the amount of 2,204 bln tenge (USD 5,104 mln).

	UoM	1Q 2022	1Q 2021	%
Dated Brent², average	$/bbl	102.23	61.12	67.3%
Dated Urals², average	$/bbl	90.60	60.05	50.2%
Exchange rate, average	KZT/USD	457.41	419.94	8.9%
Revenue	bln tenge	1,957	1,192	64.1%
Share in profit of JVs and associates, net	bln tenge	317	142	122.9%
Net profit	bln tenge	287	286	0.5%
Net profit attributable to shareholders of the Parent Company	bln tenge	312	287	8.8%
EBITDA³	bln tenge	444	318	39.5%
Adjusted EBITDA⁴	bln tenge	179	176	1.7%
CAPEX (accrual basis)	bln tenge	73	52	40.9%
CAPEX (cash basis)	bln tenge	76	82	-6.5%
FCF⁵	bln tenge	-40	35	-215.7%
Gross debt⁶	bln tenge	3,878	3,746	3.5%
Net debt⁷	bln tenge	2,189	2,204	-0.7%

Operating results for the first quarter of 20228:

The volume of oil and gas condensate production increased by 3.2% and amounted to 5,484 thous tonnes;
Oil transportation volumes remained almost unchanged, amounting to 18,309 thous tonnes;
Hydrocarbons refining volumes at the Kazakh and Romanian refineries amounted to 4,662 tonnes.

	UoM	1Q 2022 (net to KMG)	1Q 2021 (net to KMG)	%
Oil production	thous. tonnes	5,484	5,314	3.2%
Gas production	mln m³	2,145	1,986	8.0%
Oil transportation	thous. tonnes	18,309	18,327	-0.1%
Oil refining	thous. tonnes	4,566	4,662	-2.1%

Financial Highlights for the first quarter of 20229

Revenue

Revenue for the first quarter of 2022 amounted to 1,957 bln tenge (USD 4,279 mln), which is 64.1% higher than in the first quarter of 2021.

Revenue dynamics were positively impacted by a 67.3% YoY increase in the average price of Brent crude oil.

________________________

³ EBITDA = Revenue plus Share in profit of JVs and associates, net, minus Cost of purchased oil, gas petroleum products and

refining costs minus Production expenses minus General and administrative expenses minus Transportation and Selling expenses minus Taxes other than income tax.

⁴ Adjusted EBITDA = Revenue plus Dividends from JVs and associates, minus Cost of purchased oil, gas petroleum products and refining costs minus Production expenses minus General and administrative expenses minus Transportation and selling expenses minus Taxes other than income tax.

⁵ Free Cash Flow = Net cash flow from operating activities minus Purchase of property, plant and equipment, intangible assets, investment property and exploration and evaluation assets. Dividends received from JVs and associates are included in cash flow from operating activities.

⁶Total debt at the end of the reporting period = bonds plus loans (short-term and long-term). Guarantees issued are not included in the calculation.

⁷Net debt at the end of the reporting period: Bonds plus loans minus cash and cash equivalents minus bank deposits (short-term and long-term). Guarantees issued are not included in the calculation.

⁸Production figures are given in accordance with KMG's share of ownership in shares and associates and 100% of indicators for consolidated subsidiaries. More detailed information is available in the press release on the production results for the first quarter of 2022 at the link: https://www.kmg.kz/rus/investoram/reporting-and-financial-result/.

⁹On March 11, 2021, the Company and Samruk-Kazyna signed a trust management agreement in respect of 100% of the common shares of KazTransGas JSC (“KTG”). On November 9, 2021, the Company transferred 100% of KTG shares to Samruk-Kazyna for 1 tenge and the trust management agreement was terminated. The transaction was preceded by the fulfillment of a number of legal and financial conditions, including obtaining approvals from state bodies and KMG's creditors. The last of the conditions was fulfilled on November 8, 2021. Effective from November 8, 2021, KTG has been classified as a discontinued operation. For details, see Note 4 to the Interim Condensed Consolidated Financial Statements for the three months ended 31 March 2022.

Share in profit of joint ventures and associates

The share of profits of joint ventures and associates for the first quarter of 2022 more than doubled to 317 bln tenge (USD 693 mln), mainly as a result of an increase in profits of “Tengizchevroil” LLP by

111 bln tenge (USD 242 mln), “KMG Kashagan B.V.” by 36 bln tenge (USD 78 mln), “Mangistau Investments B.V.” by 22 bln tenge (USD 49 mln).

EBITDA

EBITDA for the first quarter of 2022 amounted to 444 bln tenge (USD 971 mln), an increase of 39.5% compared to 318 bln tenge (USD 758 mln) in the first quarter of 2021, mainly due to an increase in profits in joint venture enterprises and associated companies, in particular, “Tengizchevroil” LLP.

Adjusted EBITDA

Adjusted EBITDA, reflecting dividends received from joint ventures and associates, excluding share in income of joint ventures and associates, for the first quarter of 2022 amounted to 179 bln tenge (USD 392 mln), showing an increase of 1.7% year by year.

Net profit

The Company's net income slightly increased from 286 bln tenge (USD 681 mln) in the first quarter of 2021 to 287 bln tenge (USD 628 mln) in the first quarter of 2022

Net profit for the period attributable to shareholders of the parent company amounted to 312 bln tenge (USD 682 mln).

Cost of purchased oil, gas, oil products and other materials

The cost of purchased oil, gas, oil products and other materials in the reporting period increased by 101.3% compared to the first quarter of 2021 and amounted to 1,466 bln tenge (USD 3,204 mln). The increase in production costs was largely due to the increase in the average oil price and the weakening of the average exchange rate of tenge against the US dollar.

Operating expenses

Operating expenses for the first quarter of 2022 increased by 32.4% compared to the first quarter of 2021 and amounted to 190 bln tenge (USD 416 mln), mainly due to an increase in electricity costs of KMG International N.V. because of the increase in tariffs and the growth of expenses for wages to employees in the regions of presence in general for KMG.

Transportation and distribution costs amounted to 32 bln tenge (USD 69 mln), up 3.5% compared to the first quarter of 2021.

General and administrative expenses increased by 26.2% to 33 bln tenge (USD 71 mln), due to an increase in employee salaries.

Taxes other than income tax increased by 24.6% in the first quarter of 2022 to 110 bln tenge (USD 240 mln), mainly as a result of higher rent tax and MET expenses due to higher oil prices.

Finance costs for the first quarter of 2022 amounted to 84 bln tenge (USD 183 mln), which is 43.8% more than in the first quarter of 2021, mainly due to the write-off of previously recognized costs due to the early repayment of the loan from Eximbank.

Capital expenditures

In the first quarter of 2022, capital expenditures (on an accrual basis, disclosed in segment reporting) of the Company amounted to 73 bln tenge (USD 159 mln), an increase of 40.9% compared to the same period last year, mainly due to repair work at the Petromidia refinery.

Debt management

Debt indicators

	UoM	Dec.31, 2022	Dec.31, 2021	%
Bonds	bln tenge	2,961	2,706	9.4%
Loans	bln tenge	917	1,040	-11.8%
Gross debt	bln tenge	3,878	3,746	3.5%
Guarantee obligations, not included in the consolidation	bln tenge	0	1.6	-100.0%
Gross debt with guarantee obligations	bln tenge	3,878	3,748	3.5%

Numbers may not add up due to a rounding.

Total debt as of March 31, 2022 was KZT 3,878 bln (USD 8,317 mln), an increase of 3.5% in tenge compared to December 31, 2021 (a decrease of 4.1% in dollar terms) as a result of the depreciation of the tenge against the US dollar. At the same time, on February 18, 2022, the financial guarantee, which was not included in the consolidation of the Company as security for the fulfillment of obligations of AstanaGas KMG JSC, was terminated in the amount of 1.6 bln tenge.

In January 2022, Atyrau Oil Refinery LLP (ANPZ) made full early repayment of a loan from Eximbank in the amount of USD 604 mln (259 bln tenge), including interest. The funds reserved in November 2021 were used for repayment.

In the first quarter of 2022, KMG International N.V. received loans to finance working capital: syndicated loan in the amount of USD 150 mln (68.6 bln tenge), short-term loan from Natixis in the amount of USD 52 mln (24.0 bln tenge) short-term loan from BCP in the amount of 37 mln USD (17.1 bln tenge) a short-term loan from the Bank of Tokyo-Mitsubishi UFJ Ltd in the amount of USD 32 mln (14.7 bln tenge).

Also, in the reporting period, KMG International N.V. repaid a short-term loan from ING Bank NV in the amount of USD 56 mln (25.5 bln tenge).

Net debt

Net debt as of March 31, 2022 was 2,189 bln tenge (USD 4,694 mln), which is 0.7% lower in tenge than as at December 31, 2021.

Cash and cash equivalents

Consolidated cash and cash equivalents including deposits

	UoM	Mar.31, 2022	Dec.31, 2021	%
Cash and cash equivalents	bln tenge	1,057	976	8.3%
Short-term deposits	bln tenge	573	511	12.1%
Long-term deposits	bln tenge	60	56	7.3%
Cash and cash equivalents including deposits	bln tenge	1,689	1,542	9.5%

Consolidated cash, cash equivalents, including cash in the form of deposits as of March 31, 2021 increased by 9.5% compared to the indicator as of December 31, 2021, and amounted to 1,689 bln tenge (USD 4,694 mln). The increase in cash and cash equivalents was mainly due to the depreciation of the tenge against the US dollar. In dollar terms, consolidated cash equivalents increased by 1.4% to USD 3,623 mln from USD 3,572 mln as of 31 December 2021.

Key corporate events from the beginning of 2022:

On January 21, 2022, Atyrau Refinery made full early repayment of the loan from Eximbank in the amount of USD 604 mln (259 bln tenge), including interest.
On March 22, 2022, an accident occurred at the marine terminal of the Caspian Pipeline Consortium near Novorossiysk as a result of a severe storm in the Black Sea, as the consequence two out of three remote mooring facilities were damaged. After carrying out the necessary repairs, the terminal began operating normally on April 23, 2022.
Since April 15, 2022 Mirzagaliev M.M. has been appointed as the Chairman of the Management Board of KMG.
On May 6, 2022, the Company, in accordance with the decision of Samruk-Kazyna JSC and the National Bank of the Republic of Kazakhstan, declared dividends for 2021 in the amount of 327.80 tenge per share for a total amount of 200 bln tenge.
Since the beginning of 2022, new appointments have been made in the structure of the Board of Directors and the Management Board of KMG. As of June 7, 2022, the Board of Directors of KMG consists of 8 people (Walton K.D. - Chairman of the Board of Directors, Mirzagaliev M.M., Karabalin U.S., Zhanadil E.B., Auganov G.K., Holland F.M., Miller T.G., Khairova A.A.), the KMG Management Board consists of 5 people (Mirzagaliev M.M. - Chairman of the Board, Iskaziyev K.O., Karabaev D.S., Munbaev M.K., Abdulgafarov D.Ye.).

^[1] The amounts were converted to US dollars for user convenience at average exchange rates for respective periods (average USD/KZT for the first quarter of 2022 and 2021 were at 457.31 and 419.94 respectively; period-end USD/KZT as of 31 March 2022 and 31 March 2021 were at 466.31 и 431.80 respectively).

² Source: S&P Global Platts.

Responsible business for sustainable development

Tue, 07 Jun 2022 04:30:57 +0500

A conference on Responsible Business for Sustainable Development was held on 3 June 2022 in Aktau under the auspices of the Ministry of Ecology, Geology and Natural Resources of the Republic of Kazakhstan. The conference was attended by ecologists from more than 180 industrial enterprises of the country and international organisations.

In the course of the event, the participants learned about advanced technological solutions to improve energy efficiency and reduce the burden on the environment as well as about existing opportunities to offset the carbon footprint through the implementation of ‘green’ projects.

Moreover, the conference included an awards ceremony for ecologists of various enterprises. The KazMunayGas Group’s ecologists were awarded with lapel badges ‘For Contribution to Ecology’, certificates of honour and letters of gratitude.

While presenting the awards, Mr. Brekeshev, Minister of Ecology, Geology and Natural Resources, thanked all the specialists for their responsible attitude to environmental protection.

It is worth mentioning that this is the first large-scale event aimed to strengthen cooperation and share experience of Kazakh enterprises and international organisations on up-to-date environment, climate change and regulation issues. The conference coincides with the celebration of the World Environment Day.

The year 2022 also marks the 50th anniversary of the first United Nations Conference on the Environment — the 1972 Stockholm Conference, which led to the creation of UNEP and proclamation of 5 June as the annual World Environment Day.

Mr. Iskaziyev, Deputy Chairman of KMG’s Management Board, holds meeting on preparations for the 100th anniversary of Emba

Sat, 04 Jun 2022 11:14:59 +0500

Kurmangazy Iskaziyev, Deputy Chairman of the Management Board for Exploration and Production at JSC NC “KazMunayGas” (KMG), made a working visit to Atyrau region. He held an operations meeting with the management of Embamunaigas JSC (EMG) and its oil and gas production departments — Zhaikmunaigas, Kainarmunaigas, Dossormunaigas and Zhylyoymunaigas.

The operating results for the four months of 2022 and maintaining the scheduled oil production were discussed at the meeting. Mr. Iskaziyev instructed to intensify the drilling of production wells to meet the scheduled oil production volume. Aside from that, the meeting participants dwelled on the current plans to develop geologic exploration works.

Mr. Iskaziyev also pointed out that special attention should be paid to ensuring the social stability in teams and improving internal communication between management and production personnel.

Moreover, the holding of festive events correlated with EMG’s 100th anniversary was discussed during the meeting. Mr. Iskaziyev familiarised himself with the programme of events dedicated to the 100th anniversary of Emba. As a result of the meeting, a number of instructions were given to the work group members.

Mr. Iskaziyev, Deputy Chairman of KMG’s Management Board, visits Ozenmunaigas

Fri, 03 Jun 2022 11:19:08 +0500

Kurmangazy Iskaziyev, Deputy Chairman of the Management Board for Exploration and Production at JSC NC “KazMunayGas”, made a working visit to the town of Zhanaozen, where he had meetings with the staff of Ozenmunaigas JSC. The meetings were also attended by trade union representatives.

During his working trip to Ozenmunaigas, Mr. Iskaziyev visited several facilities, in particular, the department in charge of oil treatment and production service, department in charge of repairing oilfield equipment and technological communications, and met with the teams responsible for well servicing and workover. KMG’s Deputy Chairman also held a working meeting with the heads of Ozenmunaigas’ divisions. The operating results for the five months of 2022 were reported and the forthcoming tasks were updated at the meeting.

The meeting also included the discussion of arranging the national referendum aimed at introducing amendments to the Constitution of the Republic of Kazakhstan. In his speech, Mr. Iskaziyev pointed out that the referendum was an important historical event that would determine the future of the country and invited the staff to take part in the vote.

In their turn, the oil workers expressed their support for the referendum and the expected changes to the Constitution, which provide for greater citizen participation in state government and political modernisation.

Mr, Iskaziyev, KMG’s Deputy Chairman, meets with Karazhanbas and Kalamkas teams

Thu, 02 Jun 2022 11:20:52 +0500

Kurmangazy Iskaziyev, Deputy Chairman of the Management Board for Exploration and Production at JSC NC “KazMunayGas”, visited the Karazhanbas and Kalamkas fields in Mangistau region, where he had meetings with the production personnel and contractor employees.

Damir Shyrakbayev, Deputy General Director for Geology of Mangistaumunaigas JSC (MMG), Xu Shigo, First Deputy General Director of MMG, Li Tieqiang, General Director of Karazhanbasmunai JSC (KBM), Kuanyshbai Nurgaliyev, First Deputy General Director of KBM, heads of departments, administrations and workers as well as representatives of trade union organisations took part in the discussion of organisational issues.

Speaking before Karazhanbasmunai’s oil workers, Mr. Iskaziyev focused on production indicators and process upgrade projects and emphasised that resources should be consolidated for the timely commissioning of the formation water desalination plant at the Karazhanbas field.

While visiting Mangistaumunaigas, KMG’s Deputy Chairman checked on the operation of the oil treatment and pumping shop at the Kalamkas field. Currently, oil treatment unit 3 is being prepared for commissioning in the oil treatment and pumping shop. It should be noted that oil treatment unit 1 and oil treatment unit 2 were commissioned in 1988 and 2001, and are outdated. Commissioning of the new unit will ensure uninterrupted oil treatment.

Mr. Iskaziyev also discussed with teams the upcoming national referendum on amendments to the Constitution of the Republic of Kazakhstan scheduled for 5 June. In his speech, he noted that the referendum was an important event for the country, as the changes in the Constitution would affect future generations of Kazakhstan. The oil workers expressed their support for the referendum and their willingness to participate in the vote.

Apart from that, the employees asked some questions, which were timely answered, and made some suggestions.

Mr. Iskaziyev, Deputy Chairman of KMG’s Management Board for Exploration and Production, holds meetings in Kyzylorda and Aktobe

Wed, 01 Jun 2022 11:23:05 +0500

Kurmangazy Iskaziyev, Deputy Chairman of the Management Board for Exploration and Production at JSC NC “KazMunayGas”, held working meetings with the teams of producing enterprises in Kyzylorda and Aktobe regions on 1 June.

The meetings in Kyzylorda and Aktobe were attended by office executives and employees as well as production personnel of JV Kazgermunai LLP, PetroKazakhstan Kumkol Resources JSC, Kazakhoil Aktobe LLP, Kazakhturkmunay LLP and Urikhtau Operating LLP (Akshabulak, Nuraly, Kumkol, Aryskum, Laktybai, Karatobe, Kozhassai, Alibekmola fields). The meeting addressed current issues of operations and the results of the four months of 2022. A total of approximately one thousand people attended the meetings personally and via videoconferencing.

The meeting also included the discussion of the forthcoming national referendum aimed at introducing amendments to the Constitution of the Republic of Kazakhstan. In his speech, the Deputy Chairman of the Management Board noted that the referendum was an important event for the country, as the changes in the Constitution would affect future generations of Kazakhstan.

The oil workers expressed their support for the referendum and the expected changes to the Constitution, which provide for greater citizen participation in state government and political modernisation.

Mr. Iskaziyev held a similar working meeting on 31 May in KMG’s headquarters. The meeting was attended by managers and employees of the exploration assets of Zhenis Operating LLP, Isatay Operating Company LLP, Zhambyl Petroleum LLP, Kurmangazy Petroleum LLP and Al-Farabi Operating LLP.

KazMunayGas and PKN Orlen discuss opportunities for partnership

Mon, 30 May 2022 11:27:14 +0500

On 30 May, Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, held a meeting with Daniel Obajtek, President of the Management Board and Chief Executive Officer of PKN Orlen, Poland.

The parties exchanged their views on promising areas of cooperation of mutual interest.

Mr. Obajtek presented to KMG’s management Orlen’s capabilities in the field of oil refining automation, petrochemical development and introduction of emission reduction technologies. The Polish party also expressed interest in the supply of Kazakh oil to Orlen.

Head of KMG met with heads of subsidiaries

Fri, 20 May 2022 09:57:35 +0500

Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, has held an extended meeting with the heads of KMG’s subsidiaries.

Mirzagaliyev heard reports from the heads of subsidiaries on the results of current operations and their plans. The head of KMG instructed the management of Embamunaygas JSC, Kazakhoil Aktobe LLP and Kazgermunay JV LLP to ensure that approved oil production targets are achieved by the end of this year. In addition, the Chairman of the Management Board instructed the subsidiaries to submit detailed plans for elimination of process constraints at the fields and enhancing of oil recovery factor (ORF).

Refinery managers need to ensure that production targets for 2022 are achieved. M. Mirzagaliyev also stressed the importance of taking measures to ensure stable operation of process units and prevent emergency shutdowns and incidents.

The management of JSC “KazTransOil” was instructed by the head of KMG to complete the reconstruction and upgrade of Astrakhan-Mangyshlak water main by the end of 2023. The Chairman of the Management Board also emphasized the need to increase income and optimise expenditures of KTO to improve financial sustainability and increase dividends for 2022.

Mirzagaliyev specifically discussed the occupational safety issues and instructed the heads of subsidiaries to hold meetings with the personnel. They are to communicate to employees the priority and importance of compliance with work discipline, industrial, fire and transport safety, health and environmental requirements.

“Ensuring safety of employees and reduction of accident rate is everyone’s top priority, and operational performance cannot be an excuse for neglecting the safety rules,” stressed the head of KMG during the meeting.

Earlier, M. Mirzagaliyev held a similar meeting in Aktau with subsidiaries in Mangystau Region.

CEO is appointed for KazMunayGas-Aero LLP

Fri, 20 May 2022 09:53:39 +0500

On 19 May, the sole shareholder of KazMunayGas-Aero LLP appointed Ildar Tagirovich Shamsutdinov as CEO of the company. He has replaced Nurzhan Nurlanovich Nurlanov.

Ildar Shamsutdinov is an oil and gas expert with management experience in trading, business development, logistics and contracting both in oil and gas production companies in Kazakhstan and the Russian Federation and in the international trading companies.

Shamsutdinov graduated from the Kazakh State Academy of Management in 2000 with a degree in Finance and Credit, and in 2004 he graduated from the Satbayev Kazakh National Technical University with a degree in Oil and Gas Field Development. He holds an MBA from the Russian Presidential Academy of National Economy and Public Administration.

He started his career in 2000 as an oil sales engineer and oil transportation specialist at CNPC-Aktobemunaigas JSC.

From 2005 to 2006, he worked as a lead specialist in the oil sales department of Kazakhoil Aktobe LLP.

From 2006 to 2007, he was a lead specialist in the marketing department of Buzachi Operating Ltd.

From 2008 to 2011, he was the Head of Moscow Office of Nazymskaya Oil and Gas Exploration Company CJSC and Khanty-Mansiysk Oil Company CJSC.

From 2010 to 2017, he was the Head of Logistics Department at Zhaikmunay LLP.

Since 2017, he has worked as a Logistics Manager, Oil Product Sales Manager and Head of Trading and Business Development for Exmor Group DMCC/ Enco Trading DMCC/ Supreme Petroleum Pte Ltd (Dubai and Moscow).

JSC NC “KazMunayGas” appoints Deputy Chairmen of Management Board

Fri, 20 May 2022 09:51:53 +0500

National Company “KazMunayGas” has appointed Deputy Chairmen of the Management Board.

Arman Kurmetovich Kairdenov has been appointed Deputy Chairman of the Management Board of JSC NC “KazMunayGas” for Oil Refining and Petrochemicals. He will oversee oil refining, refinery operations and petrochemical development.

Kairdenov graduated from the Kazakh Institute of Chemical Engineering with a degree in Chemical Technology of Carbon Materials. In 2003, he graduated from the Academy of National Economy under the Government of the Russian Federation with a degree in Oil and Gas Business.

Arman Kairdenov started his career at the Atyrau Refinery, where he worked his way up from a process unit operator to the refinery manager.

From 2006 to 2008, he worked at JSC NC “KazMunayGas” as the General Manager of the Petrochemical Department and Deputy Director of the Oil Refining Department.

From 2008 to 2012, he was Deputy CEO and CEO of Rompetrol Rafinare S. A., (Romania).

From 2012 to 2013, he was CEO of Atyrau Refinery LLP.

From 2013 to 2018, he worked at SEZ Atyrau JSC, The Rompetrol Group Corporate Centre S.R.L., KazMunayGaz - Refining and Marketing JSC.

From 2019 to 2021, he worked as Director of the Technical Development Department, Managing Director for Oil Refining, and Director of the Oil Refining and Petrochemicals Department of JSC NC “KazMunayGas”.

Since July 2021, he has been CEO of Atyrau Refinery LLP.

Bulat Kalavyanovich Zakirov has been appointed Deputy Chairman of the Management Board of JSC NC “KazMunayGas” for Oil Transportation, International Projects and Sary-Arka Gas Pipeline Construction.

Zakirov graduated from the Kazakh State Academy of Management with a degree in International Monetary and Financial Relations and from the University of Dundee in Scotland with a degree in Oil and Gas Economics.

From 1999 to 2009, he worked at JSC “KazTransOil” as a specialist of the Strategic Planning Department, manager of the Project Management Department, Chief Manager, Deputy Director and then Director of the Transport Logistics Department, Director of the Advanced Development Department and Deputy CEO for Development.

From 2009 to 2011, he was Deputy CEO and CEO of KMG-Transcaspian LLP.

From 2012 to 2016, he worked as an Advisor to the CEO, Managing Director for Production, Deputy CEO for Development and Managing Director for Assets of JSC “KazTransOil”.

From 2016 to 2018, he was an Advisor to the CEO of KMG Systems & Services LLP.

Since 2018, he has been the Director of the Oil Transportation Department, Head of Oil Transportation Administration of JSC NC “KazMunayGas”.

Vasily Sergeyevich Lavrenov has been appointed Deputy Chairman of the Management Board of JSC NC “KazMunayGas”. His job duties will include the legal aspects of the company’s operations.

Lavrenov graduated from the Kazakh State Law Academy in 2000 and from Duke University Law School (Japan) in 2004.

He started his career in 1999 as a paralegal in Titul Legal Agency LLP. He then worked as a lawyer at Grata Law Firm LLP.

From 2001 to 2002, he worked as a legal advisor in the legal department of NAC Kazatomprom JSC.

From 2002 to 2005, he was a partner in Grata Law Firm LLP.

From 2005 to 2007, he worked as a Head of Legal Department, Chief Legal Advisor of the Kazakhstan Branch of Bateman Kazakhstan Oil and Gas Company B.V.

From 2007 to 2008, he was the Director of the Legal Service of the oilfield services company Integra Management CJSC (Representative Office in the RoK).

From 2008 to 2017, he was the Director of the Legal Department and General Counsel of Eastcomtrans Group.

From 2019 to 2022, he has been the Senior Partner, Consultant at Greenline Services Ltd in Budapest.

The Public Council of Samruk-Kazyna JSC starts hearings of the Fund`s national companies as part of public control

Fri, 20 May 2022 09:50:16 +0500

On 20 May 2022, the Public Council of Samruk-Kazyna JSC chaired by Bolat Zhamishev held a meeting to publicly discuss the report of JSC NC “KazMunayGas” (KMG) on implementation of the development plan and strategy in 2021. The meeting was attended by representatives of Samruk-Kazyna JSC, public, expert community and other stakeholders.

Attendees discussed KMG’s business and financial results for the past year. These include 21.7 million tonnes of oil and 8.1 billion м³ of gas produced in 2021, 74.6 million tonnes of oil transported and 18.8 million tonnes of oil refined.

The company’s revenue last year exceeded 5.8 trillion tenge and its consolidated net profit (including share in profits of joint ventures) was 1.2 trillion tenge. KMG’s free cash flow for 2021 was 669 billion tenge, which was distributed to pay dividends in the amount of 200 billion tenge. The remainder will be used to finance KMG’s priority projects and for debt repayment.

The company’s free cash flow may decline this year due to increased salary budget for production personnel, cost of contractors’ services, and lower global prices for Urals oil compared to Brent, and an increase in the tax burden, which requires maintaining a liquidity cushion. However, the amount of dividends to be paid in 2022 was approved at 200 billion tenge, which is almost 4 times higher than last year’s dividends (56 billion tenge).

“To make it clear, besides the cash flow, the net profit includes non-cash income that cannot be used to pay dividends, and not includes some cash outflows such as capital expenditures, debt repayment and others. The share of paid dividends depends on the overall financial health of the company, its debt burden and affects the company’s international credit ratings and, accordingly, the price of Eurobonds traded on international and Kazakh exchanges. Net profit and free cash flow for 2021 also include the relevant figures of JSC “KazTransGas” (NC QazaqGaz JSC) until 9 November 2021, to which KMG no longer has access due to its withdrawal from the Group,” explained Dauren Karabayev, Deputy Chairman of KMG’s Management Board.

In addition, in November 2021, the company approved a 2031 Development Strategy.

“The strategy reflects changes in KMG’s asset portfolio to enter the oil and gas chemical business, the global trend for energy transition to clean energy sources and tighter carbon regulation. Over the next ten years, the Company will focus on increasing its oil and gas resource base, efficiency of current production, development of new petrochemical processing stages, introduction of digital technologies and solutions, and reducing its carbon footprint,” said Dastan Abdulgafarov, Deputy Chairman of KMG’s Management Board for Strategy, Investment and Business Development.

The company’s current and future projects were also presented to the Public Council members. It should be noted that KMG is currently completing construction of a polypropylene plant and is involved in Tengiz and Karachaganak expansion projects. The company also has a number of socially important infrastructure projects on its agenda, including reconstruction of Astrakhan-Mangyshlak main water pipeline, construction of a seawater desalination plant in Kenderli and a new gas processing plant in Zhanaozen. KMG also carries out exploration projects both onshore and offshore in the Caspian Sea.

There are 24 collective agreements in place in KMG subsidiaries. The company management holds regular meetings with employees and trade unions to identify problematic issues and develop measures to address them.

The Public Council separately discussed KMG’s compliance system, including anti-corruption, insider information disclosure, listing issues and existing sanction risks. The company also has a hotline, which received 76 calls in 2021. The complaints were confirmed in 16 cases, 52 complaints were not confirmed, and the rest were withdrawn by the applicants themselves or were not within the company’s competence. Most of the complaints concerned procurement-related violations and labour issues.

Let us note that the Public Council of Samruk-Kazyna JSC was established in December 2021 through open competitive selection of candidates and consists of 10 members (7 representatives of the public and 3 representatives of the Fund).

M. Mirzagaliyev: “The safety of ordinary workers is under special control”

Sat, 14 May 2022 10:52:11 +0500

Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC “KazMunayGas”, has held an extended meeting with the CEOs of KMG’s subsidiaries and dependent entities (KMG’s SDEs).

Having heard the reports of the subsidiaries’ CEOs on daily performance and work plans, Mr. Mirzagaliyev made note of some issues requiring special attention. Specifically, the head of KMG instructed the CEOs of Ozenmunaigas JSC, Mangistaumunaigas JSC and Karazhanbasmunai JSC to ensure by the end of this year that the oil production and delivery plan is implemented in accordance with the approved targets.

The meeting paid special attention to occupational safety and injury rate reduction. Mr. Mirzagaliyev emphasised that this task was of priority for the subsidiaries’ management.

To ensure social stability in the region, the Chairman of KMG’s Management Board ordered to initiate the holding of regular reporting meetings with labour teams. He also instructed to take the compliance with the labour law under special control. “This issue applies equally to the employer and the employees. We should prevent any facts of violation of labour discipline and arrangements, as well as connivance of this by line managers,” Mr. Mirzagaliyev noted.

During the meeting, the management of Ozenmunaigas JSC was instructed to solve the problems of emergency power outage, which significantly hinders the achievement of targets.

The head of KMG also noted that scientific institutes should be engaged and up-to-date scientific and production methods should be applied to improve the process of new well drilling and increase the oil recovery factor.

The Chairman of the Management Board made special note of the problem of delayed commissioning of the desalination plant at Karazhanbas field. Mr. Mirzagaliyev instructed to speed up the launch of the facility.

The head of KMG also ordered to intensify efforts to reduce the volume of single-source procurements for all the subsidiaries in the region.

JSC NC KazMunayGas First Quarter of 2022 Trading Update

Fri, 13 May 2022 11:59:37 +0500

Highlights for first quarter of 2022:

Oil and gas condensate production increased by 3.2% and amounted to 5,484 thous. tonnes;
Oil transportation volumes remained almost unchanged and totaled to 18 309 thous. tonnes;
Hydrocarbons refining volumes at the Kazakh and Romanian refineries are 4,566 thous. tonnes.

	1Q 2022 (net to KMG)	1Q 2021 (net to KMG)	%
Oil production, thous. tonnes	5,484	5,314	3.2%
Gas production, mln m³	2,145	1,986	8.0%
Oil transportation, thous. tonnes	18,309	18,327	-0.1%
Oil refining, thous. tonnes	4,566	4,662	-2.1%

Operating results are represented in accordance with KMG's ownership interest in joint ventures and associates and 100% of results for consolidated subsidiaries, unless otherwise stated.

Upstream

Oil and gas condensate production volume for the first quarter of 2022 amounted to 5,484 thous. tonnes (458 kbopd) representing an increase by 3.2% compared to previous year. Production volume of natural and associated gas raised by 8.0% to 2,145 mln m³.

Oil and condensate production, thous. tonnes	1Q 2022 (net to KMG)	1Q 2021 (net to KMG)	%
OMG	1,250	1,299	-3.7%
MMG	720	712	1.2%
EMG	627	595	5.5%
Tengiz	1,457	1,331	9.4%
Kashagan	386	305	26.8%
Karachaganak	285	279	2.0%
Others	758	794	-4.6%
Total	5,484	5,314	3.2%

Oil production at Tengiz increased by 9.4% compared to the first quarter of last year, amounting to 1,457 thous. tonnes (129 kbopd). Associated gas production also increased significantly by 9.3%, amounting to 810 mln m³. The notable increase in production was due to a partial easing of restrictions under the OPEC+ agreement, as well as due to the reliable operation of all complex technological lines, including the new installations of the second-generation plant and sour gas injection.

Oil production at Kashagan rose significantly by 26.8% on the back of restrictions eases under the OPEC + agreement, as a result of which KMG's production reached 386 thous. tonnes (34 kbopd) for the first quarter of this year. The volume of production of natural and associated gas also increased significantly by 27.6% and amounted to 236 mln m³.

Oil and condensate production at Karachaganak increased by 2.0% and amounted to 285 thous. tonnes (25 kbopd). Gas production increased by 3.2% and amounted to 550 mln m³. The increase in production was due to the commissioning of the Karachaganak Gas Debottlenecking Project at the Karachaganak processing complex.

The volume of oil and condensate production at operating assets decreased by 1.3% to 3,356 thous. tonnes (270 kbopd) and gas production increased by 4.2% to 549 mln m³. The decline in oil and condensate production was mainly due to a natural decline in production at mature fields and a decrease in production at Ozenmunaigas because of events at the beginning of the current year and an emergency power outage by the utility company in March.

Midstream

The volume of oil trunk pipelines and sea transportation in the first quarter of 2022 slightly decreased by 0.1% compared to the same period last year and amounted to 18,309 thous. tonnes¹.

Oil transportation, thous. tonnes	1Q 2022 (100%)	1Q 2022 (net to KMG)	1Q 2021 (net to KMG)	%
KazTransOil	9,758	9,758	10,238	-4.7%
Kazakhstan-China Pipeline	4,703	2,351	2,045	15.0%
MunaiTas²	1,288	657	481	36.6%
Caspian Pipeline Consortium	15,778	3,274	3,067	6.7%
Kazmortransflot	2,269	2,269	2,496	-9.1%
Total	-	18,309	18,327	-0.1%
1 Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation. 2 Munaitas is an equity-consolidated joint venture and transportation volumes are quoted at a 51% ownership interest.

The volume of oil transportation through trunk pipelines in the first quarter of 2022 increased by 1.3% and amounted to 16,040 thous. tonnes. The growth was due to an increase in the volumes of oil supplies towards Kazakhstan’s refineries to ensure the required refining volumes in the domestic market. Nevertheless, natural decline in oil production at mature fields caused reduction of export transportation volumes. The overall reduction of export transportation was partially offset by an increase in volumes of the Caspian Pipeline Consortium and Kazakhstan-China Pipeline due to the easing of restrictions under the OPEC+ agreement.

Compared to the same period, the total volume of oil transportation by sea in the first quarter of 2022 decreased by 9.1% to 2,269 thous. tonnes. The decline was mainly on the back ofthe decrease in the transportation volumes in the Black Sea due to an overhaul in March, 2022 at the Petromidia refinery, which is supplied with oil transported also byKazmortransflot. Decline was partially offset by an increase in additional volumes transported in the Mediterranean Sea, on the back of the global oil shipping market recovery.

Trading

Sales volumes of KMG's own produced oil and gas condensate for the first quarter of 2022 increased slightly by 0.5% and amounted to 5,238 thous. tonnes, of which 60.7% was exported.

Supplies of own produced oil and gas condensate volumes to the domestic market amounted to 2,056 thous. tonnes, including deliveries of crude oil from operating assets (Ozenmunaigas, Embamunaigas, Kazakhturkmunai and Urikhtau Operating) in the amount of 1,222 thous. tonnes to Atyrau, Shymkent and Pavlodar refineries for further oil refining and sales of oil products.

Downstream

Hydrocarbon refining, thous. tonnes	1Q 2022 (net to KMG)	1Q 2021 (net to KMG)	%
Atyrau refinery	1,315	1,178	11.7%
Pavlodar refinery	1,400	1,397	0.2%
Shymkent refinery¹	731	681	7.4%
Caspi Bitum	71	72	-2.4%
Petromidia	980	1,265	-22.5%
Vega	69	69	0.7%
Total	4,566	4,662	-2.1%
[1] Shymkent refinery processing volume is indicated at a share of 50%

For the first quarter of 2022, the total volume of hydrocarbon processing decreased by 2.1% compared to the same period in 2021 and amounted to 4,566 thous. tonnes:

At Kazakh refineries, the volume of hydrocarbon processing increased by 5.7% and amounted to 3,517 thous. tonnes. The increase in refining volumes was due to the shutdown of production at the Atyrau Refinery at the same period last year because of deep voltage drops in electrical networks and the restoration of demand for oil products to pre-pandemic levels this year;
The volume of refining at the KMG International refineries (Petromidia, Vega) in Romania decreased by 21.3% and amounted to 1,049 thous tonnes. The decrease in refining volumes is associated with the shutdown of the Petromidia plant for scheduled repairs from March 11 to April 8, 2022.

For the first quarter of 2022 the volume of production of oil products at Kazakh and Romanian refineries decreased by 2.8% and amounted to 4,174 thous. tonnes:

Kazakhstani refineries produced 3,151 thous. tonnes of oil products, which is 5.1% more than last year, due to the recovery in demand for oil products in the domestic market after the pandemic;
Refineries of KMG International (Petromidia, Vega) produced 1,023 thous. tonnes of oil products, which is 21.1% lower than in the first quarter of 2021 due to a corresponding decrease in refining volumes at the Petromidia refinery in Romania.

KMG Employees Congratulate Great Patriotic War Veterans

Fri, 06 May 2022 03:04:27 +0500

Employees of JSC NC "KazMunayGas” visited the veterans of the Great Patriotic War, living in the capital city, just before the Victory Day. The employees congratulated them on the upcoming holiday, and handed over to them flowers, food baskets and envelopes with material assistance on behalf of the company.

The KMG team would like to pay their deepest respect to the veterans. We cherish the memory of your great feat and great sacrifice.

Eternal memory and glory to the defenders of the Fatherland!

NC KazMunayGas JSC published Annual Report for 2021

Sat, 30 Apr 2022 20:26:06 +0500

The Annual Report, the Company’s primary documents that discloses information to its stakeholders, has been prepared in compliance with the best practices and requirements of information disclosure standards.

The Annual Report is available at the following link: Annual reports 2021

Address of the CEO of Samruk-Kazyna JSC to the Employees of the Fund Group

Thu, 28 Apr 2022 05:29:23 +0500

Traditionally, the “Workers’ Memorial Day” - the International Day of Remembrance of People who Died or were Injured at Work is celebrated all over the world on April 28. According to the International Labor Organization, about 6,000 people die in the workplace every day in the world, and this figure increases approximately by 10% annually.

The topic of the 2022 Workers’ Memorial Day is “Act Together to Build a Positive Safety and Health Culture”. In view of this, “joint efforts” mean the responsibility and participation of each employee in the formation of safe working conditions.

The issues of improving the health, safety and environment system (hereinafter - HSE) are of the highest priority for me personally and for the Fund as a whole. A person’s life was and remains the main value. All employees of the Fund Group, without exception, must return home to their families unharmed.

Samruk-Kazyna JSC has announced the current year as the “Year of Safety and Labor Protection”. Each of us should think about personal contribution and participation in improving the HSE system, set specific goals that contribute to achieving a high level of prevention of accidents and injuries in the workplace.

Over three years, the Fund’s Group of Companies has carried out significant work in the field of HSE. In 2021, the number of the injured decreased by 36% as compared to 2019. But we are still far from positive targets. We expect all employees of the Fund Group to increase their personal commitment to occupational safety and health issues. To do this, it is necessary to transform the culture of thinking and create a high team spirit.

I am sure we can prevent any accident.

To build a positive HSE culture, the employees should:

be responsible for the safe work, for their personal safety and the safety of their colleagues;
immediately report violations of HSE requirements, accidents, potentially dangerous incidents;
take measures to stop or correct unsafe work or unsafe working conditions;
be an active advocate for HSE compliance.

All these efforts should be supported by modern digital solutions. This is the only way we can achieve a tangible risk reduction.

Our employees are the main value of the company. The results of the Fund’s activities and the value created for investors depend on the level of professionalism and safety of each employee.

We are interested in achieving the HSE goals and encourage everyone to join in the implementation of its ideas. Our hard work to protect the health and safety of our employees, contractors and the public is a fundamental factor in the long-term and successful business of the Samruk-Kazyna JSC Group of Companies.

Almassadam Satkaliyev

Heads of KMG and Tatneft Discuss Implementation of Joint Projects

Thu, 21 Apr 2022 05:05:40 +0500

On 20 April Magzum Mirzagaliyev, Chairman of the Management Board of JSC NC "KazMunayGas” (KMG), held a meeting with Nail Maganov, General Director of Tatneft PJSC (Tatneft).

The head of KMG noted that Tatneft is among the key partners, and the cooperation between the companies covers a number of strategic areas. M. Mirzagaliyev particularly emphasized further implementation of the joint oil-and-gas chemistry projects.

Additionally, the company leaders looked into the matters of cooperation in exploration and oil-and-gas production projects on the territory of Kazakhstan.

The President receives Chairman of Management Board of “KazMunayGas” Magzum Mirzagaliyev

Wed, 20 Apr 2022 10:55:39 +0500

Kassym-Jomart Tokayev was presented with a report on the current activities of the national company, its financial situation and development prospects for the period ahead.

Special emphasis was made on the situation over the Caspian Pipeline Consortium. President Tokayev was reported that the repair work of single-port mooring would be completed soon, which will allow to return to the previous volumes of transportation of Kazakh oil through the CPC.

The Head of State was informed about the construction of a polypropylene production complex in Atyrau region. According to Magzum Mirzagaliyev, this plant is planned to be put into operation in the coming months, due to which Kazakhstan will be able to become a net exporter of petrochemical products.

President Tokayev emphasized the special importance of developing the Kazakhstan’s petrochemical industry.

Scammers “Raise” Money of Kazakh Nationals on Behalf of KazMunayGas

Fri, 15 Apr 2022 07:44:25 +0500

Currently, scammers have built a dedicated website and distribute videos, where they propose that Kazakh nationals invest their money to what they say is National Company “KazMunayGas”. In consideration, the scammers promise a fast return from sales of oil and gas.

KazMunayGas would like to assert that it does not raise any funds of the Kazakh nationals for any investment projects. The advertisement being spread is misleading and fraudulent.

We are asking the Kazakh people to be alert and to trust the official sources only.

Please bear in mind that the information on the company’s operations is posted only on the www.kmg.kz website, and on our pages in the social media.

KMG and TotalEnergies Discuss Prospects for Cooperation

Fri, 15 Apr 2022 07:43:56 +0500

On 14 April, Magzum Mirzagaliyev, Chairman of the Management Board, JSC NC "KazMunayGas", held a meeting with Julien Pouget, TotalEnergies Senior Vice President for Asia Pacific.

The parties discussed current cooperation issues and business opportunities.

In particular, the managers exchanged opinions on the importance of implementing further stages of Kashagan field development in line with the optimal long-term development strategy and safeguarding of the economic interests of the nation and the foreign investors.

Besides, the project for construction and operation of a hybrid wind mill farm with 1 GW of the total capacity and an electric power accumulation system was discussed.

KMG's head noted the promising outlook of cooperation between the two companies and made an emphasis on ensuring uninterrupted production operations at the strategically important enterprises amidst the global geopolitical instability.

In his turn, Julien Pouget commended the current relationship between the companies and emphasized that TotalEnergies will continue to closely cooperate with KMG on oil transportation projects, Kashagan field development, alternative energy and other focus areas.

Magzum Mirzagaliyev appointed as Chairman of Management Board, JSC NC “KazMunayGas”

Thu, 14 Apr 2022 07:42:08 +0500

As agreed upon with the RoK President's Administration and the RoK's Government, Magzum Mirzagaliyev has been appointed as Chairman of the Management Board, JSC NC "KazMunayGas", by a resolution of Samruk-Kazyna JSC's Management Board.

Magzum Maratovich Mirzagaliyev was born on 7 November 1978.

In 1999 he graduated from Turan University, majoring in International Economy. In 2003 - the Diplomatic Academy of the Ministry of Foreign Affairs, gualifying as International Economist. He also studied at S. Yessenov Caspian State University of Technology and Engineering, did an internship in the U.S. and Malaysia.

From 2001 to 2004 – Drilling Fluid Engineer, MI Drilling Fluids International (Schlumberger), at the fields of Tengiz and Western Siberia.

From 2004 to 2007 – Business Development Manager, Production Operations Manager - Head of Aktau Branch, MI Drilling Fluids International.

From 2007 to 2010 – General Director of TenizService LLP of Joint-Stock Company “National Company “KazMunayGas”.

From 2010 to 2012 – Managing Director, JSC NC "KazMunayGas".

From 2012 to 2013 – Deputy Chairman of the Management Board for Innovation-based Development and Service Projects, JSC NC "KazMunayGas".

From 2013 to 2014 – Vice Minister of Oil and Gas of the RoK.

From 2014 to 2019 – Vice Minister of Energy of the RoK.

From 2019 to 2021 – RoK’s Minister of Environment, Geology and Natural Resources.

From September 2021 to 2022 – RoK's Minister of Energy.

Since January 2022, he has held the post of Advisor to the RoK's President.

D. Tiyessov, Deputy Chairman of KMG's Management Board, Leaves Office

Wed, 13 Apr 2022 04:33:41 +0500

Daniyar S. Tiyessov, Deputy Chairman of KazMunayGas’ Management Board for Oil Refining and Petrochemistry, was dismissed from office on 8 April 2022 at his own request.

Nevertheless, note that D. Tiyessov is carrying on with his work as Chairman of the KPI Inc. LLP's Management Board. He is faced with the task of launching a polypropylene production gas chemical facility in the Atyrau Region.

D. Tiyessov has a 30-year record of working in positions of responsibility in the oil-and-gas sector, of which over 20 years have been within KazMunayGas.

Kurmangazy Iskaziyev Appointed as Acting Chairman of KazMunayGas’ Management Board

Mon, 11 Apr 2022 12:46:15 +0500

Kurmangazy Iskaziyev has been appointed as Acting Chairman of the Management Board of JSC NC “KazMunayGas” (KMG) by resolution of the Management Board of Samruk-Kazyna JSC. The powers of Alik Aidarbayev as Chairman of the Management Board have been terminated ahead of schedule based on the application he’s filed.

Kurmangazy Iskaziyev graduated from Lenin Kazakh Polytechnic Institute, Oil Department, as a mining geological engineer. In 2006, he defended a thesis at Tomsk Polytechnic University and was awarded the qualification of a candidate of geological and mineralogical sciences. In 2021, he defended a thesis at Gubkin Russian State University of Oil and Gas and was awarded the academic degree of a doctor of geological and mineralogical sciences. Holder of the RoK State Al-Farabi Award in science and engineering (2015).

Mr. Iskaziyev started his career in 1985 at Embaneft Production Association where he subsequently went through all stages of production from an operator to the General Director of Embamunaigas JSC.

From 2006 to 2008, he held the positions of Deputy Director of the Geology and Development Department and Director of the Geology and Development Department at KazMunaiGas Exploration Production JSC.

From 2008 to 2015, Mr. Iskaziyev worked for JSC NC “KazMunayGas” as Executive Director for Oil and Gas Production, Managing Director for Geology, Geophysics and Reservoirs, Chief Geologist, Deputy Chairman of the Management Board of JSC NC “KazMunayGas” for Geology and Promising Projects, Managing Director for Non-Operating Assets (Tengiz, Kashagan, Karachaganak), Managing Director for Geology.

From 2015 to 2018 — General Director (Chairman of the Management Board) of Embamunaigas JSC, General Director (Chairman of the Management Board) of KazMunaiGas Exploration Production JSC.

From 2018 to 2020 — Deputy Chairman of the Management Board of JSC NC “KazMunayGas” for Exploration, Production and Oilfield Services, Deputy Chairman of the Management Board of JSC NC “KazMunayGas” for Geology and Exploration.

From 2020 — General Director (Chairman of the Management Board) of KazMunaiGas Exploration Production JSC.

From February 2022 — Deputy Chairman of the Management Board of JSC NC “KazMunayGas” for Exploration and Production.

KMG’s Digital Transformation

Tue, 05 Apr 2022 12:47:27 +0500

A series of workshops on the modules of the ABAI information system implemented by the KazMunayGas Group’s companies will be held in Atyrau on 6-8 April 2022 as part of the annual North Caspian Regional Exhibition — Atyrau Oil and Gas. The event will be hosted by the Abai Centre (a STEAM space called JasSpace). Representatives of KMG’s digital transformation team will report on the progress of digitalisation of the oil and gas sector on the first day before the workshops start.

The ABAI IS Development project implemented by KMG Engineering LLP is currently the key project in the KazMunayGas Digital Transformation Program’s portfolio. The ABAI System is a completely national digital product. The system will combine data on the KMG group’s exploration and production and enable automatic processing, analysing and instant visualisation of such data. The system consists of a number of self-contained modules developed using mathematical algorithms, machine learning and artificial intelligence. There are currently five pilot modules implemented — ABAI Database, Visualisation Centre, Complication Monitoring, Process Mode and Downhole Pumping Equipment Selection. A total of over 20 system modules will be built, each of them to address a specific production issue.

In general, the ABAI IS is intended to serve as an industry standard for the digitalisation of key exploration and production processes — from exploration and drilling to operation and economic impact analysis. The full implementation of the system is estimated to cut the KMG subsidiaries’ operating costs by 2–3%.

KazMunayGas Warns of Scam

Thu, 31 Mar 2022 08:33:26 +0500

Currently, fake information on attracting personal savings of Kazakh citizens to investment projects is being spread in social media and messengers on behalf of National Company “KazMunayGas”.

KazMunayGas would like to assert that the advertisement being spread is misleading and fraudulent. We are asking nationals of Kazakhstan to be alert and to trust the official sources only.

Please bear in mind that the information on the company’s operations is posted only on the www.kmg.kz website, and on our pages in the social media.

Global Catalyst Manufacturer and KMG Open Laboratory in Atyrau

Fri, 25 Mar 2022 08:38:27 +0500

On Friday, March 25, the first specialized laboratory in Kazakhstan for testing catalysts used in the production of petroleum products opened in Atyrau. The new laboratory is equipped with state-of-the-art equipment that determines the chemical composition, surface area and other physical properties of the samples of FCC catalytic cracking catalysts.

The catalytic cracking process ensures deep processing of oil and increases the yield of gasoline and liquefied gas by means of processing fuel oil and vacuum gas oil. Highly accurate and timely results of the analysis of FCC catalyst samples will enable the country's refineries to quickly make adjustments to the technological process for the production of high-quality petroleum products.

Until now, Kazakh refineries have been sending catalyst samples to European laboratories, and it took them a long time to get the results. With the opening of the new laboratory, the time for obtaining the results of sample analysis will be reduced to two days.

The laboratory opened as part of a joint venture created by the American company W. R. Grace & Co. (Grace) and JSC NC "KazMunayGas” (KMG). Grace is a global manufacturer of FCC catalysts with seven manufacturing sites around the world. The joint venture will be staffed by Kazakh specialists, and Grace will train them to work with advanced equipment.

Currently, Grace and KMG are evaluating the prospects for building a full-cycle plant in Kazakhstan for the production of catalysts used in the RoK's oil refining industry. This will reduce the cost of catalysts through the use of domestic raw materials and cheaper logistics.

In addition, the possibility of cooperation with domestic universities for apprenticeships and traineeships for students on the premises of the new laboratory is being explored.

KMG and Shell Discuss Development Prospects for Kashagan and Karachaganak Projects

Wed, 16 Mar 2022 08:36:32 +0500

On Tuesday, March 15, Alik Aidarbayev, Chairman of the Management Board, JSC NC “KazMunayGas” held a meeting with Shell’s Executive Vice President for Exploration and Production Peter Costello.

In his welcoming speech, Alik Aidarbayev congratulated Peter Costello on his appointment as Shell's Executive Vice President and wished him every success in his work.

The head of KMG noted his satisfaction with the relationship dynamics on all cooperation projects between KMG and Shell in Kazakhstan. Alik Aidarbayev stressed that the cooperation of the parties is implemented in a spirit of mutual understanding and partnership.

In his turn, Peter Costello mentioned the importance of the Kazakh projects in Shell's business.

The parties discussed a wide range of bilateral issues, including projects for the further development of the Kashagan and Karachaganak fields, as well as increasing the local content and nationalization of personnel in these projects.

Besides, a fruitful exchange of views on the current situation in the global hydrocarbon market took place during the meeting.

KazMunayGas and EBRD Discuss Prospects for Cooperation in Low-carbon Development

Wed, 16 Mar 2022 08:35:29 +0500

Alik Aidarbayev, Chairman of the Management Board, JSC NC "KazMunayGas", has held a meeting with the management of the European Bank for Reconstruction and Development (EBRD).

Alain Pilloux, EBRD's Vice President, briefed the meeting participants on the operations of the bank, which has invested over EUR 9 billion in the implementation of various projects in Kazakhstan since 1993. He also reaffirmed the readiness of the financial institution to support KMG's endeavour to reduce the carbon footprint within the framework of the 2022-2031 Low-carbon Development Programme.

Agreements were reached on technical assistance from the EBRD in the implementation of a system and procedures for the disclosure of financial statements related to climate change (TCFD).

The development institute is also ready to assist in analyzing the potential for the development of hydrogen energy in Kazakhstan and the regulatory framework necessary for its implementation.

In addition, the parties agreed to consider the possibility of arranging EBRD financing for the implementation of energy efficiency and renewable energy projects at the national company's assets.

JSC NC KazMunayGas 2021 Trading Update

Mon, 28 Feb 2022 10:28:47 +0500

Joint-stock (JSC) National Company (NC) KazMunayGas (“KMG” or “Company”), Kazakhstan's national vertically integrated oil and gas company, announces its operating results for 2021.

Alik Aidarbayev, CEO:

“In 2021, we updated our development strategy. Along with the traditional activities, a special place among the strategic goals is given to sustainable development of the Company. In the reporting year, the Low Carbon Development Program was also approved, which includes both current opportunities to reduce the carbon footprint and additional areas of activity for decarbonisation.

As part of business diversification, the Company continues to develop petrochemistry as a promising line of business. At the end of 2021, the main construction of the KPI petrochemical complex with an annual capacity up to 500 thousand tonnes of polypropylene was fully completed.

In November 2021, KMG's gas transportation and marketing business was transferred to the main shareholder Samruk-Kazyna for the focused development of the country's gas industry.

Being a socially and environmentally responsible Company, KMG continues to implement a number of projects in this area, including desalination plants at the Karazhanbas field and in the village of Kendirli, the reconstruction of the Astrakhan-Mangyshlak water pipeline and the environmental project TAZALYQ, designed to improve the environment in the Atyrau city. In 2021, KMG signed a number of agreements with major international companies such as Eni, Shell, Total, Air Liquide and Linde”, as part of the development in a green technologies sector.

Highlights 2021:

Oil and gas condensate production amounted to 21,651 thous. tonnes compared to 21,752 thous. tonnes in 2020
Oil transportation increased by 1.9% and amounted to 74,565 thous. tonnes
Hydrocarbons refining volumes at the Kazakh and Romanian refineries has grown noticeably by 4.2% to 18,833 thous. tonnes

	2021 (net to KMG)	2020 (net to KMG)	%
Oil production, thous. tonnes	21,651	21,752	-0.5%
Gas production, mln m³	8,081	8,191	-1.4%
Oil transportation, thous. tonnes	74,565	73,171	1.9%
Gas transportation[1], mln m³	81,851	86,590	-5.5%
Oil refining, thous. tonnes	18,833	18,077	4.2%

Operating results are represented in accordance with KMG's ownership interest in joint ventures and associates and 100% of results for consolidated subsidiaries, unless otherwise stated.

Upstream

In 2021 KMG’s oil and gas condensate production volume amounted to 21,651 thous. tonnes (444 kbopd) representing a decrease of 0.5% compared to previous year. Production volume of natural and associated gas decreased by 1.4% to 8,081 mln m³.

Oil and condensate production, thous. tonnes	2021 (net to KMG)	2020 (net to KMG)	%
OMG	5,332	5,347	-0.3%
MMG	2,944	2,977	-1.1%
EMG	2,522	2,601	-3.0%
Tengiz	5,311	5,292	0.4%
Kashagan	1,344	1,253	7.2%
Karachaganak	1,034	1,094	-5.5%
Others	3,165	3,188	-0.7%
Total	21,651	21,752	-0.5%

Oil production at Tengiz increased by 0.4% compared to the last year, amounting to 5,311 thous. tonnes (116 kbopd). Gas production slightly increased by 0.1%, amounting to 2,953 million m³. The increase was due to the easing of restrictions under the OPEC+ agreement, as well as the successful completion of the units’ overhaul of the second-generation plant and the re-injection of sour gas ahead of schedule.

Oil production at Kashagan in 2021 soared to 1,253 thous. tonnes (29kbopd), representing an increase of 7.2% on the back of restrictions eases under the OPEC+ agreement. Additionally, in the 4th quarter of 2021, sour gas injection compressors were successfully tested for performance, that in turn created opportunity to increase the gas re-injection level to 15 mln m³ per day. The volume of production of natural and associated gas increased by 7.9% and amounted to 818 million m³.

Oil and condensate production at Karachaganak decreased by 5.5% and amounted to 1,034 thous. tonnes (22 kbopd). Gas production decreased by 6.1% and amounted to 1,898 mln m³. Downward shift in production was causes by restrictions on the acceptance of gas sent for processing to the Orenburg gas processing plant, which carried out unscheduled repairs in August. Also, scheduled maintenance was carried out at Karachaganak in the 3rd quarter of 2021 to download the software for the 4th compressor and scheduled preventive maintenance of the gas re-injection compressors of the Integrated Gas Treatment Unit 2.

The volume of oil and condensate production at operating assets decreased by 1.1% to 13,963 thous. tonnes (277 kbopd) and gas production decreased by 2.1% to 2,411 mln m³. The decline in oil and condensate production was mainly due to commitments made to limit production under the OPEC+ agreement, as well as the shutdown of some wells, due to repair works to eliminate problems in the liquid oxidation-reduction system at the Embamunaigaz fields. In addition to that, there is an organic decrease in production levels at mature fields that slightly impacts downward shift of total production of mature fields.

Hydrocarbon reserves

According to reserves report prepared in compliance with international PRMS standards by the international independent firm DeGolyer & MacNaughton, KMG’s proved plus probable hydrocarbon reserves (2P) amounted to 645 mln tonnes of oil equivalent (4,983 mln boe) as of 31 December 2021. Compared to 2020, the level of 2P reserves increased by 1.8% due to a set of measures implicated to hydrocarbon reserves management, including recalculation of hydrocarbon reserves at the Uzen, Kashagan and other upstream fields, as well as due to improved macroeconomic parameters (increase in the price of oil).

Net reserves under PRMS as of 31 December 2021

Reserves, mln toe	2021 (net to KMG)	2020 (net to KMG)	%
Proved (1P)	477	459	3.8%
Proved plus Probable (2P)	645	635	1.6%
Proved plus Probable plus Possible (3P)	761	757	0.5%

Reserves, mln boe	2021 (net to KMG)	2020 (net to KMG)	%
Proved (1P)	3,694	3,550	4.1%
Proved plus Probable (2P)	4,983	4,895	1.8%
Proved plus Probable plus Possible (3P)	5,869	5,832	0.6%

Midstream

The volume of oil trunk pipelines and sea transportation in 2021 increased by 1.9% to 74,565 thous. tonnes¹.

Oil transportation, thous. tonnes	2021 (100%)	2021 (net to KMG)	2020 (net to KMG)	%
KazTransOil	41,224	41,224	42,298	-2.5%
Kazakhstan-China Pipeline	17,412	8,706	7,942	9.6%
MunaiTas²	4,273	2,179	1,694	28.7%
Caspian Pipeline Consortium	60,728	12,601	12,248	2.9%
Kazmortransflot	9,855	9,855	8,990	9.6%
Total	-	74,565	73,171	1.9%
1 Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation. 2 Munaitas is an equity-consolidated joint venture and transportation volumes are quoted at a 51% ownership interest.

In 2021 the volume of oil transportation through trunk pipelines slightly increased by 0.8% and amounted to 64,710 thous. tonnes. The growth is explained by an increase in the volume of domestic transportation towards Kazakhstan’s refineries to ensure the required volumes in the domestic market. At the same time, there is a decrease in the volume of oil export transportation due to the fulfillment of obligations by subsoil users to limit oil production under the OPEC + agreement and due to some natural decline in oil production at mature fields.

Compared to last year, the total volume of oil transportation by sea in 2021 increased by 9.6% to 9,855 thous. tonnes, mainly by the increase in transportation in the Mediterranean Sea, on the back of the world recovery of the oil shipping market.

The volume of gas transported through the trunk gas pipelines of KMG from January 1 to November 8, 2021 amounted to 81,851 mln m³. At the same time, comparing the full annual volumes for 2020 and 2021, gas transportation through main gas pipelines increased by 10.2% and amounted to 95,422 mln m³. The increase is mainly associated with an increase in transit flows of Central Asian gas to Russia and China, as well as an increase in gas consumption in the domestic market of Kazakhstan. In addition, there is a decrease in the volume of gas export transportation due to the redistribution of the gas volumes to meet the needs of the domestic market, as well as due to a decrease in the production of commercial gas by large suppliers.

Gas transportation[2], mln m³	Until 8 November, 2021 (100%)	Until 8 November, 2021 (net to KMG)	2020 (net to KMG)	%
Intergas Central Asia	54,874	54,874	57,753	-5.0%
Asia Gas Pipeline	41,611	20,805	19,888	4.6%
Beineu-Shymkent Gas Pipeline	10,709	5,354	6,347	-15.6%
KazTransGas Aimak¹	816	816	2,602	68.6%
Total	-	81,851	86,590	-5.5%

¹KazTransGas Aimak (KTGA) entered into a sale and purchase agreement for gas trunk pipelines and attributable facilities dated 19.03.21. Under the agreement, the Zhanaozen-Aktau gas pipeline was transferred to ICA. In this connection, since April 2021, the KTGA does not account trunk pipelines transportation.

Trading

Sales volumes of KMG's own produced oil and gas condensate in 2021 decreased by 1.5% compared to last year and amounted to 21,673 thous. tonnes, 63.4% of which is attributable to export volumes.

Supplies of own produced oil and gas condensate volumes to the domestic market amounted to 7,928 thous. tonnes, including supplies of crude oil from operating assets (Ozenmunaigas, Embamunaigaz, Kazakhturkmunai and Urikhtau Operating) in the amount of 4,458 thous. tonnes to the Atyrau Refinery, Shymkent refinery and Pavlodar refinery for further oil refining and sale of oil products.

The sales of commercial gas from January 1 to November 8, 2021 amounted to 18,019 mln m³, while comparing the full annual volumes for 2020 and 2021, there is a slight decrease by 0.8% to 22,473 mln m³. The prevailing share of commercial gas in the amount of 73.1% falls on the domestic market, where consumption increased by 10.9%. Export volumes decreased by 23.0% and amounted to 6,044 mln m³ due to reduced gas supplies to Russia and China.

Downstream

Hydrocarbon refining, thous. tonnes	2021 (net to KMG)	2020 (net to KMG)	%
Atyrau refinery	5,473	5,016	9.1%
Pavlodar refinery	5,407	5,004	8.1%
Shymkent refinery¹	2,582	2,397	7.7%
Caspi Bitum	464	433	7.3%
Petromidia	4,586	4,864	-5.7%
Vega	321	364	-11.8%
Total	18,833	18,077	4.2%
[1] Shymkent refinery processing volume is indicated at a share of 50%

Total refining volume in 2021 increased by 4.2% and amounted to 18,833 thous. tonnes:

Kazakh refineries’ volume of hydrocarbon refining increased by 8.4% and amounted to 13,927 tonnes. A significant increase in refining volumes at all 4 refineries in the reporting year was due to the restoration of pre-pandemic refining volumes and a return to average annual indicators
The volume of refining at the KMG International refineries (Petromidia, Vega) in Romania decreased by 6.1% and amounted to 4,907 tonnes. The decrease in refining volumes is associated with a complete shutdown of the plant for three months due to the fire of a diesel fuel hydrotreater at Petromidia on July 2, 2021. The refinery was launched on September 24, 2021

In 2021, the volume of oil products production at Kazakh and Romanian refineries increased by 3.5% and amounted to 17,404 thous. tonnes:

Kazakhstani refineries produced 12,614 tonnes of oil products, which is 7.7% more than last year, due to the recovery in demand for petroleum products in 2021
Refineries of KMG International (Petromidia, Vega) produced 4,790 tonnes of oil products, which is less by 6.3% than in 2020.

ESG

2021 was declared the Year of Ecology for the KMG group of companies as part of taking measures to comply with new ecological requirements and global trends to increase attention to environmental protection and reduce negative environmental impacts.

The company managed to reduce emissions of air pollutants, and compared to 2017, there is a substantial decrease in emissions by 19%. Measures are being actively taken to dispose oil waste and clean up oil-contaminated lands, including historical ones. According to the independent rating agency Sustainalytics, the ESG rating of KMG has increased from 69 points in 2020 to 72 points in 2021. The ESG risk rating level in 2021 improved to 28.4 points, in 2020 this indicator was 34.7 points. These results allowed KMG to move into the medium risk range and now KMG ranks 16th out of 251 companies in the oil and gas industry in the world.

In addition, a diagnostic of corporate governance was carried out in 2021, initiated by the main shareholder Samruk-Kazyna JSC. The result of this diagnostic with a BBB rating showed a significant improvement in the Company's corporate governance system compared to 2018 with the rating of B. The diagnostic shows that among the positive trends there are significant improvements in the effectiveness of the Board of Directors and the executive body, risk management, internal control and audit, sustainable development.

	UoM	2021	2020	%	IOGP¹
NO_x emmissions	tonnes per 1,000 tonnes of raw hydrocarbon production	0.24	0.22	9.1%	0.29
SO_x emmissions	tonnes per 1,000 tonnes of raw hydrocarbon production	0.22	0.23	-4.3%	0.19
Associated petroleum gas flaring intensity	tonnes per 1,000 tonnes of raw hydrocarbon production	2.1	2.2	-4.5%	8.0
Lost time incident rate (LTIR)	1 mln people-hours	0.31	0.25	24.0%	0.20
Fatality accident rate (FAR)	100 mln people-hours	2.93	0.0	-	0.56
[1] Available IOGP (International Association of Oil & Gas Producers) figures for 2020 (https://www.iogp.org/).

[1] Volumes for 2021 on gas transportation, as well as on gas and condensate production at Amangeldy Gas, taking into account volumes for the period from January 1 to November 8, in connection with the transfer of 100% shares of KazTransGas JSC (NC QazagGaz JSC) in favor of Samruk-Kazyna JSC in November 9, 2021.

[2] Volumes for 2021 on gas transportation take into account volumes for the period from January 1 to November 8, in connection with the transfer of 100% shares of KazTransGas JSC (NC QazagGaz JSC) in favor of Samruk-Kazyna JSC in November 9, 2021.

Deputy Chairmen of Management Board Appointed at KazMunayGas

Thu, 24 Feb 2022 10:45:20 +0500

National Company “KazMunayGas” has appointed Deputy Chairmen of the Management Board for Exploration and Production and for Major Oil and Gas Projects.

Kurmangazy Iskaziyev has been appointed as Deputy Chairman of the Management Board of JSC NC “KazMunayGas” for Exploration and Production. He will supervise oil and gas production at operating assets, improvement or their effectiveness and further development as well as expansion of KMG’s resource base and efficient field development.

Mr. Iskaziyev graduated from Lenin Kazakh Polytechnic Institute, Oil Department, as a mining geological engineer. In 2006, he defended a thesis at Tomsk Polytechnic University and was awarded the qualification of a candidate of geological and mineralogical sciences. In 2021, he defended a thesis at Gubkin Russian State University of Oil and Gas and was awarded the academic degree of a doctor of geological and mineralogical sciences. Holder of the RoK State Al-Farabi Award in science and engineering (2015), professor of the Oil and Gas Prospecting and Exploration Department at Gubkin Russian State University of Oil and Gas .

Mr. Iskaziyev started his career in 1985 at Embaneft Production Association where he subsequently went through all stages of production from an operator to the General Director of Embamunaigas JSC.

From 2006 to 2008, he held the positions of Deputy Director of the Geology and Development Department and Director of the Geology and Development Department at KazMunaiGas Exploration Production JSC.

From September 2015 to 2018 — General Director (Chairman of the Management Board) of Embamunaigas JSC, General Director (Chairman of the Management Board) of KazMunaiGas Exploration Production JSC.

From 2020 to present — General Director (Chairman of the Management Board) of KazMunaiGas Exploration Production JSC.

Murat Munbayev has been appointed as Deputy Chairman of the Management Board for Major Oil and Gas Projects. His duties include KMG’s participation in major projects (Tengiz, Kashagan, Karachaganak).

He graduated from Warsaw State University in 1998 with a master’s degree in international economic relations.

Mr. Munbayev started his career in 2000 as a branch manager of ABN AMRO Bank Kazakhstan. Over the years, he worked as Senior Analyst, Advisor to the Executive Vice President at Chevron, Manager for Financial Marketing and Transportation Support, General Manager for Strategic Planning and Analysis, General Manager for Marketing and Transportation at Tengizchevroil and Chevron.

From October 2020 to September 2021, he held the position of General Manager for Strategic Development and Asset Portfolio at Shell Kazakhstan.

Alik Aidarbayev Has Met with Chevron’s Vice President

Fri, 04 Feb 2022 09:56:58 +0500

On Thursday, 3 February, Alik Aidarbayev, Chairman of the Management Board of JSC NC “KazMunayGas”, held a meeting with James Johnson, Executive Vice President of Chevron.

The parties discussed a wide range of issues of bilateral cooperation, including the implementation of the Tengiz Field Future Growth Project and further development of the Karachaganak Project.

Alik Aidarbayev noted that all necessary measures had been taken during the state of emergency to ensure the stable operation of the KMG Group’s companies.

“KazMunayGas’ companies have not stopped their processes and maintained the operation under normal conditions. As a national operator, we have sufficient strength and fulfil all our obligations to third parties,” Mr. Aidarbayev noted.

“Chevron has a long history of operation in Kazakhstan. As a long-term partner, we are always ready to give a helping hand. We highly value our cooperation with KazMunayGas and share the pain caused by the tragic events,” Mr. Johnson said.

During the meeting, the partners also discussed the prospects of collaboration in the petrochemical industry.

Heads of KazMunayGas and LUKOIL Discuss Prospects for Cooperation

Wed, 02 Feb 2022 05:05:35 +0500

Alik Aidarbayev, Chairman of the Management Board, JSC NC "KazMunayGas", has held a meeting with Vagit Alekperov, President of PJSC LUKOIL, who is on a working visit in Kazakhstan.

The parties discussed current cooperation issues and business opportunities.

In particular, the two leaders exchanged opinions on the development plans for the new Caspian offshore production projects: Zhenis and Al-Farabi. They also talked about the terms of joint operations on the Kalamkas-Sea and Kalamkas project.

KazMunayGas and LUKOIL share a strategic partnership under the Agreement on joint studies of subsurface in order to assess the hydrocarbon potential of certain areas on the territory of the Republic of Kazakhstan. The companies cooperate on the Karachaganak, Tengiz, Al-Farabi and Zhenis projects, take part in the Caspian Pipeline Consortium project and in joint ventures, created to develop the Khvalynskoye and Tsentralnoye fields.

New Oil Deposits Discovered at Uzen Field

Mon, 31 Jan 2022 08:45:49 +0500

New oil deposits have been discovered at the Uzen field in the Mangistau region through additional exploration. As a result, recoverable oil reserves have increased by 39.9 million tonnes.

The increase in hydrocarbon reserves will have a significant impact on the economic performance of JSC NC “KazMunayGas”.

In 2017, a team of geologists from JSC NC “KazMunayGas”, Ozenmunaigas JSC, KMG Engineering LLP and the Aktau Branch of KMG Engineering initiated a detailed programme of additional exploration of the Uzen field. A high-resolution 3D seismic survey (368 sq. km) was carried out, the entire well stock (more than 7,500 wells) was reinterpreted, the geological concept was revised and the geological 3D model was rebuilt during 2017–2021 under the program.

Following the work done, the field’s structure was detailed and new oil deposits were discovered. As a result, the oil reserves of the Uzen field increased by 8%, which equals 39.9 million tonnes of recoverable reserves.

The adjusted volumes of hydrocarbons were put on the books by the State Reserves Committee of the Republic of Kazakhstan at the end of 2021.

Currently, the field development project is being adjusted to take into account new reserves and plan to put them into production.

For reference:

Ozenmunaigas JSC is a 100% subsidiary of JSC NC “KazMunayGas”. In 2020, the company accounted for 6% in the oil and gas condensate production volume in Kazakhstan. Ozenmunaigas produces oil and gas condensate at the Uzen and Karamandybas fields in the Mangistau region.

Uzen is one of the largest fields with unique initial geological reserves not only in the Republic of Kazakhstan but all over the world. It is a multilayer field with a complex structure, where oil and gas reservoirs are concentrated in the terrigenous section of the Jurassic-Cretaceous deposits.

On Changes in Management Board of National Company “KazMunayGas”

Tue, 25 Jan 2022 10:30:44 +0500

Due to the expiration of the labour agreement, Zhakyp Marabayev is leaving the position of Deputy Chairman of Management Board of JSC NC "KazMunayGas” for Exploration and Production.

Alik Aidarbayev, Chairman of KMG's Management Board, has thanked Mr. Marabayev for the fruitful work he has carried out. Specifically, notwithstanding the restrictions as part of the OPEC+ obligations and the impact of the coronavirus pandemic, the amount of the oilfield services has been preserved and the current level of production in the producing enterprises of the KMG group maintained.

– The last two years became a period of challenges and changes in all respects. They brought hardships; and the pandemic urged us to mobilize all our resources and became a test of strength for every one of us. However, living and working in the new reality have revealed our strengths and identified further priorities of development. ‘I'd like to express my thanks to the company's staff and every oil worker of KazMunayGas for our joint efforts’, – Zhakyp Marabayev noted.

Zhakyp Marabayev has descended from a family of oil workers, he has has been employed for around 40 years in the positions of responsibility in the petroleum industry. Over the years, he worked as General Director of KazakhstanCaspiShelf JSC, Vice President of KazakhOil CJSC, Vice President of KazTransOil JSC, Chief Executive Office of KazMunaiGas Exploration Production JSC, Deputy Managing Director of North Caspian Operating Company.

KazMunayGas Group on the current situation

Tue, 11 Jan 2022 03:47:12 +0500

Joint-stock National Company KazMunayGas (“KMG”) informs on the stable assets’ operation during the state of emergency in the Republic of Kazakhstan.

Oil & gas producing, oil transporting, oil refining, gas processing, service and the other Group assets did not stop their production processes and maintain operations in a normal condition.

At the same time, there are shutdowns of some separate drilling wells at production facilities and a slight decrease in oil production, which does not significantly affect the overall results of the KMG.

The impact of the current situation in the Republic of Kazakhstan in connection with the riots in early January 2022 on the KMG will be properly disclosed in a regular financial, operational and other reports.

It is worth noting that KMG fulfills all of its obligations to third parties, including complying with all covenants and other conditions in its international loan agreements and that KMG has a sufficient margin of safety and cash liquidity for such force majeure cases.

As of now, the Crisis Management Team is taking all necessary measures on the prevention of destabilization of the situation at production facilities and on prompt responds to emerging issues.

KazMunayGas Group’s Employees Receive State Awards

Thu, 30 Dec 2021 05:01:55 +0500

On 15 December, JSC NC “KazMunayGas” held an online event to celebrate the 30th anniversary of the Independence of the Republic of Kazakhstan.

The anniversary celebration was attended by representatives of subsidiaries from across the country. The company’s management highlighted the country’s achievements in the 30 years of Independence and emphasised important developments in the oil and gas sector.

On the eve of the main public holiday, state awards were presented to the group’s employees, who have made a significant contribution to the development of the country and the region. For example, Malik Junussov, Shift Supervisor of the Central Engineering Service of the Operations Management Department, Embamunaigas JSC, was awarded the Order of Kurmet (Respect).

Tolegen Bykilov, Operator of Oil Production Shop No. 2, Karazhanbasmunai JSC, was awarded the Order of Yenbek Danky (Labour Glory) of the third degree.

Yeren Yenbegi Ushin Medals (For Distinguished Labour) were awarded to Lukpan Bisaliyev, Head of Oil and Gas Production Shop No. 2 Karsak, Dossormunaigas Oil and Gas Production Department, Embamunaigas JSC; Zhumabek Segizbayev, Oil and Gas Production Operator of Kalamkasmunaigas Production Department, Mangistaumunaigas JSC; Konakbai Kuzekenov, Oil and Gas Production Operator of Zhetybaimunaigas Production Department, Mangistaumunaigas JSC; Amangeldy Samiyev, Head of Karazhanbasmunai Production Automation Shop; Rassul Yussupov, Operator of the Drilling Operations Department, Ozenmunaigas JSC.

In addition, oil workers were awarded with 30 Years of Kazakhstan Independence Anniversary Medals, medals of KAZENERGY Association and honorary certificates of KMG.

A total of 500 employees across the KMG Group received awards and honorary certificates, including 21 employees who received state awards.

“Thirty years ago we embarked on the path of sovereign development and building a free state. Thanks to the balanced and open policy of the First President of the country, Yelbassy Nursultan Nazarbayev, we have earned the respect and trust of the entire international community. Large-scale reforms and systematic industrialisation of the economy have ensured the balanced development of every region of the country, and the oil and gas industry has become the foundation and key driver of economic transformation.

The course taken by Yelbassy is being successfully continued by the head of state, Kassym-Jomart Tokayev, who also attaches great importance to the development of the oil and gas sector.

The current impressive success of young and independent Kazakhstan was made possible by the selfless work of all oil workers — people who are sincerely dedicated to their work and dream of a bright future for their native land,” Alik Aidarbayev, Chairman of KMG’s Management Board, said in his speech.

The results of the Annual Best HSE Innovation and Practice Awards of the KazMunayGas Group were also summarised at the celebration event. This year, the first place winner was Anuar Kaltayev, Chief Manager of the Health, Safety, Fire and Emergency Department of KazTransOil JSC. The second place went to Sergey Dechev, Electrician, and Ivan Porokh, Senior Engineer, at Petro Kazakhstan Oil Products LLP. Third place went to Baldyrgan Umirbekova, an engineer at KMG-Kumkol LLP.

Construction of Gas Chemical Complex Completed in Atyrau

Tue, 28 Dec 2021 04:47:45 +0500

The Gas Chemical Complex of Kazakhstan Petrochemical Industries Inc. (KPI) in Atyrau Region is about to start up the plant, which will produce more than 65 different grades of polypropylene.

On 27 December, the new plant received its first batch of propane from Tengiz Field. In November, the plant received nitrogen and dry compressed air. In the summer, the company fed electricity to the main step-down substation and later primary desalinated, demineralised and process water from Karabatan Utility Solution LLP. This completes the connection of all the utilities required for plant commissioning and subsequent start-up.

JSC NC “KazMunayGas” is exploring a new business area with this project, which is deeper processing of hydrocarbons. A new industry is being born in Kazakhstan — petrochemistry, which has a high economic and social impact on the country and Atyrau Region in particular. Every dollar in this industry generates an additional 2-3 dollars of growth in the economy and helps to create seven new jobs in related industries. About 500 jobs will be created at the plant itself during the operation phase.

29,000 tons of steel structures were erected, more than 165,000 cubic metres of concrete was poured, 2,500 kilometres of cables and 261 kilometres of process pipelines were laid during the construction. CNCEC (China) was the general contractor, and more than 40 Kazakhstan-based companies were involved in the construction and installation.

“Construction did not stop despite the coronavirus pandemic that broke out during the active construction phase, quarantine restrictions, closed borders and stopped manufacturers. We were able to maintain the pace while staying within the budget thanks to non-standard solutions and support from the Government and the management of Samruk-Kazyna Fund,” Damir Ashimov, First Deputy Chairman of KPI Inc., said.

Feed propane is delivered to the complex by rail in tank cars. The trestle has leak-tight unloading equipment from EMCO WHEATON (USA), the feedstock will be pumped by compressors from SIAD (Italy). An average of 72 cars with a total volume of 2,300 tonnes are unloaded per day.

“Railway trestle operators will receive the feedstock to be pumped to a tank farm equipped with a gas detection system. Propane will then be fed to a dehydrogenation unit to produce propylene. The polymerisation unit will produce the final product — polypropylene,” Denis Kozyrev, Chief Engineer, says.

The complex has an annual capacity of 500,000 tonnes of polypropylene, which is a basic feedstock in mechanical engineering, medicine and electrical engineering and is used in the production of packaging materials, containers, fibres, pipes and fittings for hot water supply, office equipment and consumer electronics, consumer goods, garden and office furniture.

The tank farm consists of four storage tanks manufactured in South Korea. Each tank is 42 metres long and holds 2,500 cubic metres of propane.

The project involved major global leaders such as Siemens, MAN, SGS, Air Liquide, Mitsubishi and others. Manufacturers’ chief engineers came to Atyrau to set up the high-tech equipment and train operators on how to use it.

KPI’s project employs modern technology, which will make the complex fully digital. Warehousing operations such as packing, storage and loading onto trucks and rail vehicles will be carried out by special robotics without human intervention. Dedicated IT solutions and corporate accounting systems will make it possible to maintain highly accurate records from the planning of operations to the sales of finished products to the end customer.

The company notes that the complex is fully compliant with all environmental requirements. The feedstock is propane, which has already been stripped of harmful impurities and is converted through the production chain into propylene and then into polypropylene. These processes do not generate hazardous substances such as hydrogen sulphide, sulphur dioxide and aromatic hydrocarbons.

The complex is also environmentally friendly in terms of water consumption — it has closed-loop process water supply. Integration with Karabatan Utility Solutions LLP’s wastewater treatment facilities achieves the objective of reducing water consumption through almost complete recycling and reuse of wastewater.

Another important factor is the strategic partnership with SIBUR, a major petrochemical company. The partner’s experience and expertise will open up new markets for KazMunayGas’ products.

KMG Ranks First in ESG Disclosure in Top 50 Rating of PwC Kazakhstan

Thu, 23 Dec 2021 04:53:12 +0500

JSC NC “KazMunayGas” ranks first in top 50 companies for disclosure of non-financial information in corporate reports for the second consecutive year.

The rating was made by PwC Kazakhstan among 96 companies. The survey assessed the quality and availability of ESG information in annual reports and sustainability reports of Kazakh companies published in 2021.

The purpose of the rating is to assess how Kazakh companies disclose ESG information, identify best practices and provide recommendations for further development.

The rating methodology includes 76 criteria. A score is given for each criterion (from 1 to 10). The rating criteria included such disclosures as sustainability management, social policy, environmental impact and corporate governance. Additional points were awarded for the clarity and quality of information.

“The quality of ESG disclosure in the reports of Kazakh companies continues to improve. The most notable quality improvement of disclosures is in Sustainability Management, where the description of ESG policies and approaches and sustainability strategy disclosures were rated. Companies more often follow international initiatives. More companies said they support the UN Sustainable Development Goals (46% in 2020 versus 30% in 2019),” PwC Kazakhstan said in its report.

In its Development Strategy 2031, KazMunayGas defined sustainable development as one of the strategic objectives aimed at integrating the sustainability principles in the key business processes, operations, and decision-making practices. We are systematically incorporating these principles into our operations by improving our business processes, taking ESG risks into account,” Alik Aidarbayev, Chairman of the Management Board of JSC NC “KazMunayGas”, says.

KazTransOil JSC, a subsidiary of KMG, was also among the top three in the rating.

For more details about the rating, please visit https://www.pwc.com/kz/en/assets/pdf/top-50.pdf

KAZENERGY and KMG Honour Industry Veterans

Thu, 23 Dec 2021 04:52:30 +0500

To celebrate the anniversary of Kazakhstan’s independence, KAZENERGY Association and KazMunayGas National Company met with veterans of the oil and gas industry, those who were at the forefront of establishing the country’s leading economic sector.

In line with new ethics, event organisers invited specialists from Meyirim Medical Centre to conduct a rapid test for Covid-19 as a way of showing respect and concern for the guests. Everything went quickly and efficiently, and the guests were very understanding.

In his opening speech, Timur Kulibayev, KAZENERGY Chairman, thanked the older generation of oil workers for their many years of constructive work.

“The contribution of Kazakhstan’s oil and gas workers in all achievements and breakthroughs is significant — geologists, drillers, engineers, process engineers, representatives of other professions, those who have selflessly dedicated their lives to the domestic oil and gas sector, those who for three decades have created and developed oil and gas projects that have become national assets,” the head of the Association said.

Magzum Mirzagaliyev, RoK Minister of Energy, and Serikkali Brekeshev, RoK Minister of Ecology, Geology and Natural Resources, also expressed their respect and gratitude to the veterans and spoke about the current state and prospects of oil and gas market development, preservation of regional ecology and ways of achieving carbon neutrality.

In his address, Alik Aidarbayev, Chairman of the Management Board of KazMunayGas, also congratulated the veterans and spoke about the national company’s current activities, achievements and future production plans.

“Our company has made significant progress over the years of independence. New industries have been created and modern infrastructure has been built in all areas of life. This gave a powerful boost to the oil and gas sector, which is the driver of the national economy and a solid foundation for the prosperity of the people of Kazakhstan. Much of the credit for this goes to you. Your long experience, professionalism, dedication and hard work are a worthy example for the current generation of oil workers. The traditions you established have become a solid foundation for young professionals, inspiring them to new achievements,” the head of KMG said in his address to the industry veterans.

Uzakbai Karabalin, Deputy Chairman of KAZENERGY Association, shared the results of the association’s activities, initiatives and active cooperation with industry companies:

“The association’s activities today focus on three areas. Firstly, we try to channel the expertise and experience of veterans into solving day-to-day production, technical and process issues of the industry companies. We are getting a positive response here from companies concerned. We focus on publicity. One of the objectives is to spread knowledge and commemorate the veterans who have done tremendous work to develop the country’s oil and gas industry. And the third area is education and preparation to pass on experience to new generations: meetings of veterans with young people in universities that train professionals for the oil and gas industry”.

Kenzhebek Ibrashev, CEO of KAZENERGY, presented a book and a film on the development of the oil and gas industry over 30 years of Kazakhstan’s independence:

“With the support of experts and veterans, many of whom are present in the room today, we have published the book “Oil and Gas of Kazakhstan. 30 Years of Independence. The Path of Creation”. In addition to the book, a 5-part documentary film on the development of the industry called Through Depth to the Top has been produced for the anniversary of independence. These projects are very important — they focus not on us, but on the young, future generation of Kazakhstanis, and depict the real, first-hand history of the industry establishment.

The evening ended with a ceremony to present industry awards to veterans.

KazMunayGas Sets Up Expert Council Involving Oil and Gas Veterans

Wed, 08 Dec 2021 06:40:52 +0500

On 6 December, the first meeting of the Expert Council comprised of oil and gas veterans and representatives of National Company “KazMunayGas”.

The Council has been set up as part of cooperation with Oil and Gas Industry Veterans, National Public Association, and serves to engage experienced specialists in making certain decisions on KazMunayGas’ operations.

For instance, the advisory body will participate in the development of expert recommendations for statutory regulation of the oil and gas sector, provide analytical and advisory support for the Company’s operations and put forward its own initiatives.

“We highly value your vast experience and practical knowledge since you are not just well informed about our core operational assets but used to participate in the formation and development of the country’s oil and gas industry. We hope for successful cooperation and effective decisions that would enable us to achieve our goals for further development of the National Company,” Mr. Aidarbayev, Chairman of the Management Board, noted during the meeting.

The meeting participants were presented KMG’s updated 2022–2031 Development Strategy and Low-Carbon Development Program.

The National Company’s current operations, oil production and reserve increment plans, main operations performed at mature fields and new technologies being introduced were also covered at the meeting.

“We are glad that KazMunayGas diversifies its business today by developing the petrochemical sector and opens up new areas of business. As specialists who have considerable knowledge and experience in the oil and gas industry, we are ready to render active assistance for the National Company’s operations,” Mr. Yelemanov, Chairman of KMG’s Expert Council of Veterans, emphasised.

The Expert Council’s meetings are planned to be held on a regular basis.

KazMunayGas Tops Environmental Transparency Rating List for 5th Year in a Row

Fri, 03 Dec 2021 06:39:00 +0500

The World Wildlife Fund (WWF), Creon Group and АКРА rating agencies have presented the results of the Eurasian Environmental Transparency Rating of Oil and Gas Companies – 2021 assignment. The on-line presentation of the rating exercise results was held on 30 November 2021 in the TASS press centre. The rating list comprises 22 Russian oil and gas companies, as well as 14 businesses from Kazakhstan, and two – from Azerbaijan.

Among the Kazakh companies, KazMunayGas is at the head of the rankings for the fifth year in a row, Karachaganak Petroleum Operating ranks number two, and North Caspian Operating Company - number three.

“KMG continues on the path of an environmentally-responsible business, it is developing the environmental protection management system, and carrying on the dialogue with all stakeholders on this matter. In doing so, it fulfills its obligations to provide for open communications, awareness and regular reporting to the stakeholders about the important environmental aspects of the Company's operations”, - Kairat Saktaganov, Director of the Environmental Protection Department, JSC NC "KazMunayGas", noted.

“The rating results over many years show high environmental transparency level of a whole number of petroleum companies. This indicates their more than adequate preparation for decarbonization of the Eurasian economy, which will not be possible without their involvement”, - said Fares Kilzie, co-founder of the rating and Chairman of Creon Group.

About the rating

The Common Sense project with an independent environmental transparency rating of oil and gas companies was initiated in Kazakhstan in 2017 by Creon Group and WWF Russia. The rating is partnered by ACRA RM rating agency. Long-term objectives of the project include development of the environmental transparency of oil-and-gas sector in the Eurasian space and assisting it during the transition to a sustainable development model with account of the ESG (Environment Social Governance) factors. The rating studies the environmental transparency of oil and gas companies with over 0.5 mn tons of oil and gas condensate extraction annually.

KazMunayGas and Tatneft Set Up Butadiene Rubber Joint Venture

Tue, 30 Nov 2021 10:57:18 +0500

On 30 November 2021, Alik Aidarbayev, Chairman of the Management Board of JSC NC “KazMunayGas”, and Nail Maganov, General Director of Tatneft PJSC, signed an Agreement on Butadiene LLP Joint Venture to be the basis for implementation of a rubber production project.

The enterprise’s planned capacity will reach up to 180 thousand tonnes of butadiene and butadiene rubbers per year. The shares of KMG and Tatneft are 25% and 75%, respectively. The project is preliminarily estimated at about 1 billion US dollars, and the parties are considering options for financing the project, including through borrowed funds.

The production is scheduled to be launched in 2026 in the territory of the National Industrial Petrochemical Technopark Free Economic Zone in Atyrau region. About 2,000 jobs will be created at the site during the facility construction, and over 700 jobs — during the facility operation.

Raw materials are supposed to be supplied from Tengiz and Korolev fields in Kazakhstan. The finished products are planned to be supplied to the tyre factory in Karaganda region and exported to Europe, Russia, China, Turkey, etc.

“In accordance with the Development Strategy, our company seeks to expand the value chain of its products and is actively developing the petrochemical industry in the Republic of Kazakhstan. This is evidenced by the setting up of a joint venture between KazMunayGas and Tatneft. I am sure that the project will contribute to arranging a partnership between Kazakhstan and Tatarstan, and will also diversify the economy of our country,” Mr. Aidarbayev noted.

“Tatneft has big plans in the petrochemical industry, and we are happy to develop this area together with our Kazakh partners. Kazakhstan is a strategic partner for us. We already have the collaborative experience, as we are also taking joint efforts to construct the tyre factory in Karaganda region. This is the practical implementation of the Strategy for Economic Integration of the Member Countries of the Eurasian Union. We have assured ourselves once again that Kazakhstan had created the most comfortable conditions for the implementation of large-scale investment projects I am confident that the new joint venture for the production of butadiene rubbers will contribute to strengthening the economies of our countries and the well-being of our people,” Mr. Maganov emphasised.

It should be recalled that KazMunayGas and Tatneft signed an agreement on the basic terms of cooperation under the Butadiene project on 5 April 2021. On 28 April 2021, the companies signed a project roadmap and a framework agreement.

70% of KazMunayGas Group’s Employees Vaccinated

Mon, 29 Nov 2021 10:52:56 +0500

More than 46 thousand employees or 70% of the total personnel of the KazMunayGas Group have been vaccinated against COVID-19. Over 43 thousand employees (66%) have received the full course of the vaccine (both doses). It should be noted that the 60% vaccination threshold has been reached by the headquarters and 47 subsidiaries and associates. Furthermore, the share of fully vaccinated employees in some of the companies exceeds 90%. These include Kazgermunai (97%), Shymkent Refinery (96%), Pavlodar Oil Chemistry Refinery (95%) and KPI Inc. (92%).

Reaching herd immunity is one of the essentials to ensure the health of the employees and uninterrupted operations of the enterprises of National Company “KazMunayGas”. Outreach activities are currently focused on those few subsidiaries that have not yet hit the 60% vaccination threshold and demonstrate anti-vax sentiments. The importance, need and safety of vaccination are regularly explained to the teams of all the subsidiaries. Meetings are held with the involvement of competent health workers, information is communicated through corporate media and social networks, cooperation has been set up with trade unions and local bodies.

“We are grateful to all the employees of the KazMunayGas Group for their commitment to the overall safety and health. The mass vaccination and the conditions provided by the company have significantly reduced the incidence of the disease among the employees. However, we are not going to stop there and set ourselves a target to have 80% of the employees vaccinated,” Kairat Saktaganov, Director of KMG’s HSE Department, noted.

It should be recalled that anti-epidemic restrictions are still in place at KMG. All the necessary conditions for vaccination have been provided. Particularly, vaccinating centres have been set up at the sites and in the offices, employees are given two extra paid days off for each stage of vaccination.

JSC NC KazMunayGas announces financial results for the nine months of 2021

Thu, 25 Nov 2021 08:22:43 +0500

Joint-stock (JSC) National Company (NC) KazMunayGas (“KMG” or Company), Kazakhstan's national vertically integrated oil and gas company, published its interim condensed consolidated financial statements according to International Financial Reporting Standards (IFRS) 34 “Interim financial statements” for the three and nine months September 30, 2021, with the independent auditor’s report on review of interim financial information.

Key financial indicators for the nine months of 2021[1]:

Revenue increased by 43.7% to 4,792 bln tenge (USD 11,284 mln) in the nine months of 2021, compared to the same period of last year;
EBITDA was at 1,590 bln tenge (USD 3,743 mln) in the nine months of 2021, up by 86.8% year-on-year;
The Company's net profit for the period increased 7-fold to 942 bln tenge (USD 2,219 mln) in the reporting period, compared to 136 bln tenge (USD 333 mln) in the nine months of 2020. Net profit attributable to shareholders of the parent company amounted to 947 bln tenge (USD 2,231 mln);
FCF amounted to 438 bln tenge (USD 1,031 mln), compared to 146 bln tenge (USD 357 mln) in the nine months of 2020;
The Company's net debt was at 2,240 bln tenge (USD 5,262 mln) as of 30 September 2021, having decreased by 13.6% from USD 2,594 bln tenge (USD 6,162 mln) at the end of 2020;
Total debt decreased by 1.3% to 4,024 bln tenge (USD 9,453 mln) as of 30 September 2021 compared to 31 December 2020.

	UoM	9M2021	9M2020	%
Dated Brent¹, average	$/bbl	67.92	41.06	65.4%
Exchange rate, average	KZT/USD	424.70	409.23	3.8%
Revenue	bln tenge	4,792	3,334	43.7%
Share in profit of JVs and associates, net	bln tenge	761	323	135.2%
Net profit	bln tenge	942	136	692.6%
Net profit attributable to shareholders of the Parent Company	bln tenge	947	223	424.7%
EBITDA²	bln tenge	1,590	851	86.8%
Adjusted EBITDA³	bln tenge	986	578	70.6%
FCF⁴	bln tenge	438	146	200.0%
CAPEX (accrual basis)	bln tenge	272	322	-15.5%
CAPEX (cash basis)	bln tenge	269	293	-8.2%
Net debt⁵	bln tenge	2,240	2,594⁷	-13.6%
Total debt⁶	bln tenge	4,024	4,078⁷	-1.3%
¹ Source: S&P Global Platts. ²EBITDA = Revenue plus Share in profit of JVs and associates, net, minus Cost of purchased oil, gas petroleum products and refining costs minus Production expenses minus General and administrative expenses minus Transportation and selling expenses minus Taxes other than income tax. ³ Adjusted EBITDA = Revenue plus Dividends JVs and associates, minus Cost of purchased oil, gas petroleum products and refining costs minus Production expenses minus General and administrative expenses minus Transportation and selling expenses minus Taxes other than income tax. ⁴Free Cash Flow = Net cash flow from operating activities minus Purchase of property, plant and equipment, intangible assets, investment property and exploration and evaluation assets plus Proceeds from the loan previously provided to Caspian Pipeline Consortium due to transfer of Kazakh pipeline assets to CPC-K. In 2020, CPC fully repaid the interest on the loan to KMG in the amount of 38 bln tenge. ⁵Net debt = Noncurrent borrowings plus Current borrowings minus Cash and cash equivalents minus Short-term bank deposits minus Long-term bank deposits. Guaranteed obligations are not included in the calculation. ⁶Total debt = Noncurrent borrowings plus Current borrowings. Guaranteed obligations are not included in the calculation. ⁷As of 31 December 2020.

Operating results for the nine months of 2021:

Oil and gas condensate production amounted to 15,923 thous. tonnes as compared to 16,423 thous. tonnes in the nine months of 2020;
The transportation volume of oil amounted to 55,727 thous. tonnes as compared to 55,225 thous. tonnes in the nine months of 2020;
Transportation volume of gas increased by 12.0% to 71,036 million m³;
Hydrocarbons refining volumes at the Kazakh and Romanian refineries increased by 7.7% to 14,083 thous. tonnes in comparison with 13,081 thous. tonnes in the previous year.

	9M 2021 (net to KMG)	9M 2020 (net to KMG)	%
Oil production, thous. tonnes	15,923	16,423	-3.0%
Gas production, mln m³	5,811	6,173	-5.9%
Oil transportation, thous. tonnes	55,727	55,225	0.9%
Gas transportation, mln m³	71,036	63,448	12.0%
Oil refining, thous. tonnes	14,083	13,081	7.7%

Operating results presented in accordance with KMG's ownership interest in joint ventures and associates and 100% of results for consolidated subsidiaries, unless specifically indicated otherwise.

For more information, please see the Trading Update for the nine months of 2021:

https://kmg.kz/uploads/reporting-and-financial-result/operating-results/Operating_results_9M_2021_en.pdf

Financial Highlights for the nine months of 2021

Revenue

Revenue amounted to 4,792 bln tenge (USD 11,284 mln) in the nine months of 2021, up by 43.7% vs. the same period of 2020. The positive impact on revenue dynamics was mainly attributable to an increase in average Dated Brent oil price by 65.4% year-on-year, weakening of the average exchange rate of tenge vs. the US dollar by 3.8% and increase in trading volumes of oil and oil products at KMG International N.V (KMGI). Revenue growth was restrained by the production restrictions at certain fields under the OPEC+ agreement and a decrease in the revenue due to a decrease in the gas and oil products sale volumes.

Share in profit of joint ventures and associates

Share in the profit of joint ventures and associates increased from 323 bln tenge (USD 790 mln) in the nine months of 2020 to 761 bln tenge (USD 1,791 mln) in the nine months of 2021. The following companies mainly supported the growth of a share in the profit: Tengizchevroil LLP with 304 bln tenge (USD 716 mln), Asian Gas Pipeline LLP with 191 bln tenge (USD 449 mln), KMG Kashagan B.V. with 58 bln tenge (USD 136 mln), Mangistau Investment B.V. (Mangistaumunaigaz JSC) with KZT 48 bln (USD 112 mln).

EBITDA

EBITDA in the nine months of 2021 was 1,590 bln tenge (USD 3,743 mln), demonstrating growth compared to 851 bln tenge (USD 2,081 mln) in the nine months of 2020 due to an increase of segmented EBITDA in Exploration and production of oil and gas, Gas trading and transportation, Refining and trading of crude oil and refined products, and Corporate centre.

Adjusted EBITDA

Adjusted EBITDA, reflecting dividends received from joint ventures and associates, and not including share in the profit of joint ventures and associates in the nine months of 2021 amounted to 986 bln tenge (USD 2,321 million), showing an increase of 70.6% year-on-year.

Net profit

The Company’s net profit increased from 136 bln tenge (USD 333 mln) in the nine months of 2020 to 942 bln (USD 2,219 mln) in the nine months of 2021 due to an increase in average oil price, increase in revenues and share in the profit of joint ventures and associates, as well as absent of significant impairment of property, plant and equipment.

Net profit for the period attributable to shareholders of the Parent Company amounted to 947 bln tenge (USD 2,231 mln).

Cost of purchased oil, gas, oil products and other materials

Cost of purchased oil, gas, petroleum products and other materials increased by 65.6% year-on-year to 2,688 bln tenge (USD 6,329 mln) in the reporting period due to higher average price and volumes of oil purchases and weakening of the average exchange rate of tenge vs. the US dollar. This was partially offset by a decrease in the cost of purchased gas for resale.

Other expenses

In the nine months of 2021, production expenses decreased slightly by 0.2% year-on-year to 544 bln tenge (USD 1,281 mln) due to the reduction of short-term lease costs.

Transportation and distribution costs decreased by 2.8% year-on-year to 317 bln tenge (USD 745 mln).

General and administrative expenses decreased by 4.6% year-on-year to 103 bln tenge (USD 244 mln), reflecting the reversal of impairment of VAT receivable, decline in expenses for consulting services.

Taxes other than income tax for the nine months of 2021 increased by 52.9% year-on-year to 312 bln tenge (USD 734 mln) mainly due to higher average oil prices.

In the nine months of 2021, finance costs, including interest expense on lease liabilities, were at 205 bln tenge (USD 482 mln), up by 1.5% year-on-year due to higher expenses on lease agreements, reflecting the new lease agreement for the Saryarka gas pipeline for 2021, and long-term office lease agreements and archival premises at KTG.

Capital expenditures

In the nine months of 2021, capital expenditures (on an accrual basis, segment reporting) amounted to 272 bln tenge (USD 639 mln), down by 15.5% from 322 bln tenge (USD 788 mln) in the nine months of 2020. Capital expenditures on a cash basis amounted to 269 bln tenge (USD 634 mln) with a decrease of 8.2% year-on-year. Capital expenditures decreased at KMGI due to scheduled overhaul in 2020, at KTG due to the completion of large investment projects in the reporting period of 2020.

Debt management

Debt indicators

	UoM	30 September 2021	31 December 2020	%
Bonds	bln tenge	3,007	2,978	1.0%
Loans	bln tenge	1,017	1,101	-7.6%
Total debt	bln tenge	4,024	4,078	-1.3%
Guarantee obligations under the syndicated loan of Beineu-Shymkent Gas Pipeline LLP	bln tenge	184	227	-18.9%
Guarantee obligations under the syndicated loan of AstanaGas KMG JSC	bln tenge	1.7	1.9	-10.5%
Total debt with guarantee obligations	bln tenge	4,210	4,308	-2.3%

Numbers may not add up due to rounding.

Total debt was at 4,024 bln tenge as of 30 September 2021 (USD 9,453 mln), having decreased in tenge terms by 1.3% (in the US dollar terms: a decrease of 2.4%) compared to 31 December 2020.

Total debt including guaranteed obligations[2] amounted to 4,210 bln tenge (USD 9,889 mln) as of 30 September 2021, decreased by 2.3% in tenge terms (a decrease of 3.4% in the US dollar terms) vs. 31 December 2020.

During the reporting period, Atyrau Refinery partially repaid a loan from the Export-Import Bank of China for USD 156 mln and fully repaid the loan from the Development Bank of Kazakhstan JSC for USD 142 mln. Atyrau Refinery received a long-term loan from Halyk Bank JSC for a total amount of 54 bln tenge with a maturity of 4 years to refinance existing loans. KMGI received a USD 50 mln short-term loan from Cargill, and a USD 46 mln short-term loan from Banque de Commerce et de Plasements to finance working capital. KMGI partially repaid a USD 71 mln short-term loan from ING Bank NV, including interest.

KMG's net debt amounted to 2,240 bln tenge (USD 5,262 mln) as of 30 September 2021, down by 13.6% in tenge terms compared to 31 December 2020 (a decrease by 14.6% in the US dollar terms).

Cash and cash equivalents

Consolidated cash and cash equivalents including deposits

	UoM	30 September 2021	31 December 2020	%
Cash and cash equivalents	bln tenge	1,186	1,146	3.5%
Short-term deposits	bln tenge	543	282	92.6%
Long-term deposits	bln tenge	55	57	-3.5%
Cash and cash equivalents including deposits	bln tenge	1,784	1,485	20.1%

Consolidated cash and cash equivalents including deposits increased by 20.1% to 1,784 bln tenge as of 30 September 2021 vs. 31 December 2020. Consolidated cash and cash equivalents in the US dollar terms increased by 18.8% to USD 4,191 mln as of 30 September 2021 vs. USD 3,528 mln as of 31 December 2020.

The increase in cash and cash equivalents is mainly due to positive net cash flow from operating activities at 707 bln tenge (USD 1,665 mln), and lower capital expenditures compared to the same period last year.

Key corporate events from the beginning of 2021:

On 11 March 2021, KMG and Samruk-Kazyna JSC signed a trust management agreement for 100% of ordinary shares of KTG;
Starting from 30 March 2021, KMG Eurobonds for a total amount of USD 6.25 bln have been included in the official list of Astana International Exchange;
On 21 April 2021, KTG obtained a consent from the holders of Eurobonds with maturity in 2027 to change the terms of the bond issue prospectus under the memorandum of consent dated 30 March 2021;
On 30 April 2021, the international rating agency S&P Global Ratings affirmed KMG's credit rating at “BB” with a “negative” outlook;
On 3 June 2021, Atyrau Refinery and the European Bank for Reconstruction and Development have signed an agreement to provide an amount denominated in tenge totalling up to USD 80 mln for financing the TAZALYQ project;
On 4 June 2021, KMG and PJSC LUKOIL signed the Agreement on Purchase of 49.99% Interest in Al-Farabi Operating LLP;
On 16 June 2021, KMG received the consent of the holders of KMG Eurobonds with maturity in 2025, 2027, 2030, 2047, 2048 to bring them into line with the terms of the KMG Eurobonds 2020 issue;
After the announcement of dividends for 2020 in May 2021 in line with the decision of Samruk-Kazyna and the National Bank of Kazakhstan, as of 3 August, KMG paid dividends in full in the amount of 50 bln tenge (USD 118 mln), including dividends paid to Samruk-Kazyna in the amount of 45 bln tenge (USD 107 mln) and the National Bank in the amount of 5 bln tenge (USD 11 mln);
On 12 August 2021, the international rating agency Moody's Investors Service upgraded KMG's credit rating from Baa3 to Baa2 following the upgrade of the sovereign rating of Kazakhstan. The outlook has been changed from “positive” to “stable”;
On 20 September 2021, the international rating agency Fitch Ratings has affirmed the NC KazMunayGas JSC's Long-Term Issuer Default Rating at BBB- (one notch below the sovereign rating) with Stable Outlook;
On 25 October 2021 International agency Sustainalytics has improved the ESG risk rating of KMG in sustainable development from 34.5 to 28.4 points;
On 27 October 2021, the KMG guarantee for the BSGP was terminated. Amendments to the loan documentation for the BSGP loan have been concluded. As a result of this transaction, KTG is the 100%guarantor of loan obligations to a syndicate of foreign banks;
In November 2021, The Board of Directors of KMG has approved the Company’s 2022–2031 Development Strategy as well as Low Carbon Development Program for 2022-2031;
On 8 November 2021, Atyrau Refinery drew up a loan from VTB Group in the amount of 38.2 billion RUB in order to refinance a foreign currency loan from Eximbank. The funds were used to reserve funds in favor of Eximbank, and the funds will be debited on schedule in January 2022. To secure the liabilities of the Atyrau Refinery KMG has issued a corporate guarantee;
On 9 November 2021, the Company transferred 100% of shares of KazTransGas in favour of Samruk-Kazyna. The transaction amount is 1 tenge. On the same day, the trust management agreement concluded on March 11, 2021 between KMG and Samruk-Kazyna JSC was terminated.

[1] The amounts were converted to US dollars for user convenience at average exchange rates for respective periods (average USDKZT for the nine months of 2021 and the nine months of 2020 were at 424.70 and 409.23, respectively; USDKZT as of 30 September 2021 and 31 December 2020 were at 425.70 and 420.91, respectively).

[2] It includes nominal amounts of guaranteed obligations on a syndicated loan of Beineu-Shymkent Gas Pipeline (BSGP) in the amount of 184 bln tenge (USD 432 mln), guaranteed obligation on a loan of JSC “AstanaGas KMG” in the amount of 1.7 bln tenge (USD 4.0 mln).

Gas Chemical Complex under Construction Getting Ready for Commissioning

Thu, 18 Nov 2021 12:48:02 +0500

One of the largest country projects, the polypropylene plant of KPI Inc. LLP in Atyrau Region with a capacity of 500,000 tonnes, has accepted nitrogen and dry compressed air as part of preparation for commissioning.

Pursuant to the design scheme, technical gases will be supplied from the cryogenic nitrogen plant and the air drying and compression unit built by Air Liquide Karabatan Tech Gases, a joint venture of JSC NC “KazMunayGas” and Air Liquide.

Acceptance of dry compressed air and nitrogen is a critical stage of pre-commissioning. Dry compressed air ensures the operation of the process control systems and metering and control instruments. It is also used for blowing and pressure tests of pipelines and vessels and ensures the operation of presses and pneumatic tools.

Gaseous nitrogen is used as an inert gas in the processes preceding raw stock intake, for blowing and pressure tests of pipelines and vessels, in emergency shut-down and fire-fighting systems, as well as in polypropylene safe storage and pneumatic transport systems to prevent generation of an explosive mixture with air.

Furthermore, final preparatory works for natural gas intake (final circuit tests, testing and blowing of natural gas lines, flare header preparation) and individual testing of the boiler plant equipment are simultaneously under way.

It should be reminded that last summer the plant received electric power in its main step-down substation, and later primarily desalted, demineralised and service water was supplied by Karabatan Utility Solution LLP.

Thus, the plant is completing acceptance of all the utilities required for commissioning and for subsequent launch and production.

KMG and LUKOIL Sign Principles Agreement for Kalamkas-Sea and Khazar Project

Tue, 16 Nov 2021 03:56:36 +0500

On 16 November 2021, Alik Aidarbayev, Chairman of the Management of JSC NC “KazMunayGas” (KMG), met with Vagit Alekperov, President of LUKOIL PJSC (LUKOIL).

The parties discussed the relevant issues of cooperation and implementation of their joint projects in Kazakhstan.

A Principles Agreement for the Kalamkas-Sea and Khazar Project was signed during the meeting. The document suggests further negotiations between KMG and LUKOIL to define the concept, details and terms of joint development of the fields.

“KMG and LUKOIL have cooperated effectively for many years. Today we discover new areas to extend the cooperation and sign the agreement for the Kalamkas-Sea and Khazar Project. I am confident that the project will give a new impetus to our mutually profitable partnership,” Mr. Aidarbayev noted.

“By signing the Principles Agreement, we lay a foundation for a dynamic interaction. We are glad we have new initiatives and projects that we can bring to life through the experience of our companies in the oil industry,” Mr. Alekperov emphasised.

It should be noted that the companies are involved in such projects as Karachaganak, Tengiz, Al-Farabi, Zhenis, in the Caspian Pipeline Consortium oil transportation project, as well as in joint ventures for the development of Khvalynskoye and Central fields.

KazMunayGas Approves 2022–2031 Development Strategy

Fri, 12 Nov 2021 04:15:24 +0500

The Board of Directors of JSC NC “KazMunayGas” (KMG) has approved the Company’s 2022–2031 Development Strategy.

For the ten years to come, the Company’s growth will be guaranteed by the effectiveness of ongoing operations, development of new process stages, introduction of latest energy saving technologies and reduction of the carbon footprint. The Strategy sets out the key development areas:

Building up the resource base sufficient for both traditional operations and prospective areas;
Maximising the benefits from upstream, midstream and downstream and increasing the effectiveness of the current value chain;
Access to cheap raw materials defines petrochemistry as a new growth area of KMG through setting up new petrochemical capacities;
Sustainable development in all operating areas and progressive reduction of carbon intensity.

Furthermore, KMG’s Board of Directors has approved the 2022–2031 Low-Carbon Development Programme that sets out the Company’s climate ambitions, key approaches and measures to reduce the carbon footprint.

Specifically, KMG intends to reduce carbon dioxide emissions by 15% by 2031 against the 2019 level (1.6 million tonnes of CO2) through energy efficiency and energy saving measures and the use of renewable energy resources.

“Given the global challenges and trends, we adapt ourselves to the current circumstances and are set to increase our competitiveness. Therefore, the Company has developed and approved the updated Development Strategy. We have a clear vision of where KazMunayGas will move ahead in the ten years to come. We will continue our active efforts to ensure the Company’s sustainable development, maintain credit ratings and implement investment projects that are of priority for the industry and the Republic of Kazakhstan,” Alik Aidarbayev, Chairman of KMG’s Management Board, noted.

KazMunayGas Transferred a 100% KazTransGas Share

Wed, 10 Nov 2021 07:02:14 +0500

On 9 November, KazMunayGas National Company (KMG) announced the transfer of 100% KazTransGas (KTG) share in favour of Samruk-Kazyna (the Fund). The transaction amount is 1 tenge.

9 November is also the day of termination of the trust management agreement concluded on 11 March 2021 between KMG and the Fund.

KTG’s shares were transferred to the Fund in pursuance of the instructions from the Samruk-Kazyna Management Council chaired by the First President of the Republic of Kazakhstan, Elbasy N. Nazarbayev, dated 3 June 2020, as well as the instructions from the executive head of the nation K. Tokayev about foundation of a gas exploration, production and transportation national operator, given at an extended Government meeting on 26 January 2021.

It should be noted that the transaction was preceded by fulfilment of a number of legal and financial conditions, including approvals from KMG lenders and relevant government agencies. At the first stage, in October 2020, KMG refinanced Eurobonds in the amount of $750 mln, and the new conditions included the possibility of KTG withdrawal. During the next stage, in June 2021, the remaining holders of KMG Eurobonds gave consent for KTG spin-off.

In addition, the transaction was agreed with KMG’s creditor banks, including through refinancing of some loans. One of the process stages was also the adoption of the RK Government Resolution “On Strategic Object Transfer” dated 8 November 2021. Based on the Resolution, KMG was approved to transfer 100% of KTG stake in favour of the Fund through the sale and purchase transaction.

At present, all KMG lenders have approved the KTG spin-off into a separate subsidiary of the Fund.

At the same time, KMG’s Consolidated Financial Statements for Nine Months of 2021 will include KTG’s financial statements. Starting from 9 November, KMG will derecognise KTG, and the result of KTG transfer will be recorded as “other distributions to shareholder” in the consolidated statement of changes in equity for 2021.

Note that KMG’s debt as a result of the KTG spin-off will decrease by $1.1 bln (by $1.6 bln with issued guarantees).

KMG intends to further promote modernisation and diversification of Kazakhstan gas industry, therefore, the cooperation with KTG in this area will remain a priority for the national company.

As a reminder, KTG has been part of KMG since the establishment of the national company in 2002. During this time, KMG has invested about 143 bln tenge into KTG’s capital in cash and assets. KTG assets have multiplied by more than 20 times from 125 bln tenge to 2.5 trn tenge, the capital increased from 61 bln tenge to 1.6 trn tenge, the revenue increased from 85 bln tenge to 900 bln tenge per year. Since the KTG foundation, more than 10 ths. km of trunk gas pipelines have been built and put into operation in Kazakhstan. Today, KTG operates more than 20 ths. km of gas pipelines and more than 56 ths. km of gas distribution networks.

VTB Gave a 38.2 bln RUB Credit to the Atyrau Refinery against KazMunayGas’s Guarantee

Tue, 09 Nov 2021 03:24:46 +0500

Atyrau Refinery (AR) and VTB Group have signed an AR financing loan agreement with the RUB 38.2 bln disbursement amount. To secure the liabilities KazMunayGas National Company has issued a corporate guarantee.

The funds will be spent to refinance the foreign currency loan for Refinery Modernisation Project financed by the Export-Import Bank of China.

Dauren Karabayev, KMG Chief Economics and Finance Officer:

“We entered into the transaction in the midst of the pandemic, however, despite the environmental challenges it was successfully closed on time. VTB agreement enabled us to leverage and diversify the KMG Group’s loan portfolio and to mitigate the overall currency risks.”

Aidar Kaliyev, Head of Central Asian Operations, VTB Senior Vice President:

“The facility transaction with AR is an important step towards strengthening the partnership between the VTB Group and KazMunayGas. It paves the way for further development of our relations and gives an access to a broad prospective market of rouble borrowings for the group companies. The completion of this transaction, which is largest in Kazakhstan oil and gas sector for VTB, confirms the Bank’s leadership and wide possibilities in providing innovative financial solutions for Kazakhstan companies.”

KazMunayGas National Company is a Kazakhstan leading vertically integrated oil and gas company. KMG asset management covers the entire production cycle, i.e. from exploration and production of hydrocarbons to transportation, refining and provision of maintenance services. The Company represents the Republic of Kazakhstan interests in the national oil and gas industry. The shareholders are Sovereign Wealth Fund Samruk-Kazyna (90.42%) and the National Bank of the Republic of Kazakhstan (9.58%). In 2020, KMG produced 21.752 million tonnes of oil and 8.191 billion m³ of associated gas and natural gas. Oil refineries refined 18.077 million tonnes of oil.

Atyrau Refinery (a subsidiary of KazMunayGas) was built during the Great Patriotic War, and in 2010–2017, it had a large-scale modernisation. As a result of the modernisation, all AR products conform to K4 and K5 emission standards, and the refinery’s capacity has been increased by 500,000 tonnes — to 5.5 million tonnes/year.

VTB Bank (PJSC), with its subsidiary banks and financial institutions (VTB Group), is a multinational financial group that provides a wide range of financial and banking services in Russia, CIS, Western Europe, Asia and Africa. As of 30 June 2021, its assets amounted to 19.6 trillion roubles, and the customer funds amounted to 14.3 trillion roubles. VTB’s main shareholder is the Russian Government, which holds 60.9% of voting shares.

Pavlodar Refinery Completing Process Units Start-Up after Overhaul Activities Done

Tue, 02 Nov 2021 11:32:53 +0500

Pavlodar Refinery started operation of all process units, except the diesel hydrotreater, as soon as overhaul activities got done. Commissioning of the diesel hydrotreater failed because of the found faulty spare part replaced in the compressor earlier.

Now, fault repair operations are in progress. The diesel hydrotreater is expected to be started on 6 November, which complies with the deadlines.

KazMunayGas and Linde Signed Memorandum of Understanding under Green Hydrogen and Ammonia Project

Mon, 01 Nov 2021 10:29:33 +0500

JSC “National Company “KazMunayGas” and the technology company Linde have signed a Memorandum of Understanding.

The parties have agreed to cooperate and jointly develop clean energy projects in Kazakhstan. The first stage of cooperation will focus on exploring the opportunity of producing hydrogen and ammonia using natural gas as feedstock (blue hydrogen and blue ammonia) and/or water electrolysis (green or blue hydrogen and green or blue ammonia).

Once a feasibility study is complete and a successful agreement is reached, a green hydrogen and green ammonia production project is to be implemented in Kazakhstan.

“KazMunayGas has a consistent and balanced approach to the decarbonisation projects as part of its adopted Low-Carbon Development Programme. Cooperation with the world’s leading companies is a priority in studying promising projects in this area,” noted Alik Aidarbayev, Chairman of KMG’s Management Board.

“I am glad our company is able to contribute to the process of decarbonisation in Kazakhstan. In particular, jointly with our partner, KazMunayGas, which has taken the lead among other companies in implementing greenhouse gas reduction activities. I am looking forward to being able to bring our large experience in this area to real projects,” emphasised Thomas Hilker, Linde Gas Rus Vice President for Investment in Russia and CIS.

It should be noted that Linde has a vast experience in delivering solutions for clean energy technologies and traditional industrial gas technologies. These include production, transportation and storage of green hydrogen and ammonia, construction of air separation plants, hydrocarbon steam reformers, electrolysers, ammonia plants, CO2 capture plants, natural gas processing plants, etc.

JSC NC KazMunayGas 9M 2021 Trading Update

Fri, 29 Oct 2021 03:14:40 +0500

Highlights for the nine months of 2021 in comparison with the nine months of 2020:

Oil and gas condensate production amounted to 15,923 thous. tonnes as compared to 16,423 thous. tonnes in nine months of 2020;
The transportation volume of oil amounted to 55,727 tonnes as compared to 55,225 thous. tonnes in nine months of 2020;
Transportation volume of gas increased by 12.0% to 71 036 million m³;
Hydrocarbons refining volumes at the Kazakh and Romanian refineries has grown by 7.7% to 14,083 thous. tonnes in comparison with 13,081 thous. tonnes in previous year.

	9M 2021 (net to KMG)	9M 2020 (net to KMG)	%
Oil production, thous. tonnes	15,923	16,423	-3.0%
Gas production, mln m³	5,811	6,173	-5.9%
Oil transportation, thous. tonnes	55,727	55,225	0.9%
Gas transportation, mln m³	71,036	63,448	12.0%
Oil refining, thous. tonnes	14,083	13,081	7.7%

Operational results for the nine months of 2021

Operating results presented in accordance with KMG's ownership interest in joint ventures and associates and 100% of results for consolidated subsidiaries, unless specifically indicated otherwise.

Upstream

The volume of oil and gas condensate production by KMG in the nine months of 2021 amounted to 15,923 thous. tonnes (436 kbopd), showing a decrease of 3.0% compared to the nine months of the last year. The volume of production of associated and natural gas decreased by 5.9% to 5,811 million m³.

Oil and condensate production, thous. tonnes	9M 2021 (net to KMG)	9M 2020 (net to KMG)	%
OMG	3,988	4,027	-1.0%
MMG	2,192	2,229	-1.7%
EMG	1,855	1,967	-5.7%
Tengiz	3,786	4,032	-6.1%
Kashagan	952	954	-0.3%
Karachaganak	768	816	-5.9%
Others	2,382	2,397	-0.6%
Total	15,923	16,423	-3.0%

Oil production at Tengiz decreased by 6.1% compared to the nine months of the last year, amounting to 3,786 thous. tonnes (111 kbopd), and gas production declined by 9.9%, amounting to 2,016 million m³. A significant impact on the decline in oil production was made by the commitments to limit production within the framework of OPEC + agreement, as well as the planned overhaul of the second-generation plant and sour gas injection units in August and September 2021.

Oil production at Kashagan in the third quarter of 2021 was increased by 20.2% compared to the third quarter of 2020 due to an increase in the quota for Kazakhstan from August of this year under the OPEC + agreement, as a result of which the production volume net to KMG for nine months of 2021 reached 952 thous. tonnes (28 kbopd), which is comparable to the volumes of the nine months of 2020, in which production restrictions began to operate only from the second quarter. The volume of production of natural and associated gas increased by 1.3% and amounted to 581 million m³.

Oil and condensate production at Karachaganak decreased by 5.9% and amounted to 768 thous. tonnes (22 kbopd). Gas production amounted to 1,404 million m³ and decreased by 6.4% from the level of nine months of 2020. The decline in production was due to restrictions on the intake of gas sent for processing to the Orenburg Gas Processing Plant, as well as due to repair work at the Gas Processing Unit - 2 and the Gas Processing Unit - 3.

The volume of oil and condensate production from operating assets decreased by 1.9% to 10,417 thous. tonnes (276 kbopd) and gas production decreased by 2.7% to 1,807 million m³. The decline in oil and condensate production is mainly due to the obligations assumed to limit production under the OPEC + agreement, as well as a natural decline in production at mature fields.

Midstream

The volume of oil trunk pipelines and sea transportation in the nine months of 2021 decreased by 0.9% to 55,727 thous. tonnes¹.

Oil transportation, thous. tonnes	9M 2021 (100%)	9M 2021 (net to KMG)	9M 2020 (net to KMG)	%
KazTransOil	30,824	30,824	31,742	-2.9%
Kazakhstan-China Pipeline	13,030	6,515	5,821	11.9%
MunaiTas²	3,047	1,554	1,199	29.6%
Caspian Pipeline Consortium	43,898	9,109	9,253	-1.6%
Kazmortransflot	7,726	7,726	7,210	7.2%
Total	-	55,727	55,225	0.9%
1 Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation. 2 Munaitas is an equity-consolidated joint venture and transportation volumes are quoted at a 51% ownership interest.

The volume of oil transportation through trunk pipelines in the nine months of 2021 remained almost unchanged compared to 2020 and amounted to 48,002 thous. tonnes. At the same time, there is a decrease in the volumes of oil delivered by KazTransOil and the Caspian Pipeline Consortium due to the fulfillment of obligations by shippers to limit oil production under the OPEC + agreement. An increase in the volume of trunk oil transportation is observed along MunaiTas and the Kazakhstan-China Pipeline, mainly due to an increase in volumes in the direction of the Pavlodar refinery and the Shymkent refinery to ensure the required refining volumes of in the domestic market.

Compared to the same period last year, the total volume of oil transportation by sea in the first nine months of 2021 increased by 7.2% to 7,726 thous. tonnes, mainly due to the growth in transportation in the Mediterranean Sea, thanks to the recovery of the oil shipping market in the world.

The volume of gas transported through the trunck gas pipelines of KMG in the first nine months of 2021 increased by 12.0% to 71,036 million m³. The increase was due to an increase in transit flows of Central Asian gas to Russia and China, as well as an increase in gas consumption in the domestic market of Kazakhstan. Along with this, there is a decrease in the volumes of gas transportation for export due to the redistribution of part of the gas volumes to meet the needs of the domestic market, as well as due to the reduction of commercial gas production by large suppliers.

Gas transportation, mln m³	9M 2021 (100%)	9M 2021 (net to KMG)	9M 2020 (net to KMG)	%
Intergas Central Asia	48,654	48,654	42,626	14.1%
Asia Gas Pipeline	33,783	16,891	14,469	16.7%
Beineu-Shymkent Gas Pipeline	9,349	4,675	4,464	4.7%
KazTransGas Aimak¹	816	816	1,889	-56.8%
Total	-	71,036	63,448	12.0%

Trading

The volume of sales of KMG's own produced oil and gas condensate in the nine months of 2021 decreased by 5.1% compared to the same period of last year and amounted to 16,141 thous. tonnes, of which 63.0% was exported.

Supplies to the domestic market of own produced oil and gas condensate amounted to 5,956 thous. tonnes, including supplies of crude oil from operating assets (Ozenmunaigas, Embamunaigas, Kazakhturkmunai and Urikhtau Operating) in the amount of 3,297 thous. tonnes to the Atyrau Refinery, Shymkent refinery and Pavlodar refinery for further oil refining and sale of oil products.

Commercial gas sales in the nine months of 2021 increased slightly, by only 0.2% compared to the nine months of 2020 and amounted to 15 523 million m³. Export of commercial gas amounted to 4,671 million m³, of which 96% was exported to China. Compared to the same period in 2020, there is a decrease in gas export volumes by 21.3%, associated with a decrease in gas supplies to Russia and China.

Downstream

Hydrocarbon refining, thous. tonnes	9M 2021 (net to KMG)	9M 2020 (net to KMG)	%
Atyrau refinery	4,007	3,679	8.9%
Pavlodar refinery	4,321	3,519	22.8%
Shymkent refinery¹	1,829	1,767	3.5%
Caspi Bitum	373	346	7.6%
Petromidia	3,326	3,504	-5.1%
Vega	227	265	-14.4%
Total	14,083	13,081	7.7%
[1] Shymkent refinery processing volume is indicated at a share of 50%

For the nine months of 2021, the total refining volume compared to the nine months of 2020 increased by 7.7% and amounted to 14,083 thous. tonnes:

At Kazakh refineries, the volume of hydrocarbon refining increased by 13.1% and amounted to 10,530 tonnes, which is comparable to the volume of nine months before the pandemic. A significant increase in refining volumes at Pavlodar refinery and Atyrau refinery is due to an increase in demand for oil products in the domestic market this year, as well as the shutdown of refineries for overhaul last year and continuous operation of refineries this year;
The volume of refining at the KMG International refineries (Petromidia, Vega) in Romania amounted to 3,553 tonnes, which is 5.7% less than in nine months last year. The decrease in refining volumes is associated with a complete shutdown of the refineryfor three months due to the fire of the diesel hydrotreating unit at Petromidia on July 2, 2021.

In the nine months of 2021, the volume of oil products production at Kazakh and Romanian refineries increased by 7.7% and amounted to 13,179 thous. tonnes:

Kazakhstani refineries produced 9,744 tonnesof oil products, which is 14.0% more than in the first nine months of last year, demonstrating a complete recovery of production volumes before the pandemic;
Plants of KMG International (Petromidia, Vega) produced 3,434 tonnesof petroleum products, which is 7.0% less than in the first nine months of 2020.

KazMunayGas: Aviation Fuel in October Produced as Planned

Thu, 28 Oct 2021 09:31:23 +0500

This October, domestic oil refineries succeed in the aviation fuel production plan.

According to the plan approved by the Ministry of Energy of the Republic of Kazakhstan, the aviation fuel production target for October 2021 was 35 thousand tonnes.

As of 28 October, the Shymkent and Atyrau Refineries produced 36.2 thousand tonnes. Taking into account the instructions of the RK Ministry of Energy, domestic refineries will additionally produce 2 thousand tonnes of aviation fuel by the end of this month. Thus, the total production of aviation fuel in October will amount to 38.2 thousand tonnes.

In total, 42.4 thousand tonnes were shipped from the Atyrau, Shymkent and Pavlodar Refineries this month (taking into account the previously produced volumes).

Today, three domestic refineries have 6.9 thousand tonnes of aviation fuel in stock.

We believe that formation of adequate aviation fuel stocks in a timely manner to ensure uninterrupted air traffic is the responsibility of airports and airlines.

KazMunayGas: Pavlodar Refinery Overhaul Completed Ahead of Schedule

Thu, 28 Oct 2021 09:27:18 +0500

The Pavlodar Refinery has begun start-up operations after the ahead-of-schedule shutdown maintenance completion. Starting from 1 November, the Refinery will reactivate production of the entire product line.

Despite the unfavourable climate conditions for such operations, the Refinery team has succeeded ahead of schedule.

A total of 933 process pipelines, 19 steam pipelines and 300 pieces of equipment passed technical examination, inspection and industrial safety expert review.

The refinery overhaul activities implied a number of major works as follows: replacement of the column, repair of the hydrogen-containing gas line and the primary oil refining boiler; replacement of furnaces gas duct, transfer line, separators and an advanced oil refining double heat exchanger etc.

Advanced oil refining high-rise 180 and 120m gas duct anti-corrosion operations deserve a particular note.

Along with the company’s staff, 1,241 contractors’ employees were involved in the overhaul operations. Competent work management, as well as well-coordinated efforts of the Refinery team and contractors, enabled successful activities and early launch of the plant.

All the activities performed during the overhaul operations will make it possible to maintain the production safety at the proper level, meet the quality requirements to oil products and achieve the required environmental targets.

Let us recall that the Pavlodar Refinery overhaul operations were rescheduled three times this year.

Ministry of Energy, Samruk-Kazyna, KMG and Total Agreed on the Alternative Energy Development in Kazakhstan

Thu, 28 Oct 2021 09:20:53 +0500

The Ministry of Energy of the Republic of Kazakhstan, Samruk-Kazyna JSC, JSC NC “KazMunayGas” and Total Eren S.A have signed a Memorandum of Understanding.

The signed document is intended to develop, finance, build and operate the hybrid power plants with a total capacity of about 1 GW, using wind energy in Kazakhstan. At the same time, the project plans to use an energy storage system based on energy accumulation, build-up and storage technologies.

Total Eren S.A, for its part, is to raise funds for the project from the international financial institutions.

The project will be implemented on a staged basis. At the first stage, the project capacity will be 200 MW with the respective electric power storage infrastructure. The project completion is scheduled for the end of 2024.

“In accordance with the approved Concept of Kazakhstan Transition to the Green Economy, the Ministry of Energy is systematically developing the renewable energy sector. This is particularly important for the southern regions of the country. In this context, for our part, we are ready to assist in the project implementation,” Magzum Mirzagaliyev, Minister of Energy, said.

“Today, the global energy industry is on the cusp of great changes. That is why, as a player in the global energy market, KazMunayGas is studying the energy transition prospects and alternative energy development. We have already developed and adopted the Low-Carbon Development Programme 2031. We are interested in renewable energy projects and consider ‘green’ energy as one of the greatest potential for decarbonisation of our operations,” Alik Aidarbayev, Chairman of KMG’s Management Board, stated.

Sustainalytics Raises the Rating of JSC NC “KazMunayGas”

Mon, 25 Oct 2021 06:06:58 +0500

International agency Sustainalytics[1] has improved the risk rating of JSC NC “KazMunayGas” in sustainable development to 28.4 points, which highlights KMG’s strong positions in managing material ESG risks in the global oil and gas market.

KMG’s first ESG risk rating of 34.5 points was assigned by Sustainalytics in 2020, reflecting a High Risk level.

Sustainalytics rates companies by assessing their environmental, social and corporate governance risks, and by benchmarking their capability to manage such risks against competitors. For detailed information about Sustainalytics rating, please follow this link.

The improvement of KMG’s rating to the Medium Risk level results from the Company’s positive sustainable development performance and the focus on implementation of the best ESG practices in its strategy and ongoing operations.

“We are happy that such a reputable agency as Sustainalytics has assessed KazMunayGas as a leader in sustainable development. We pursue an integrated and consistent approach in making the ESG principles part of our business. We have adopted the Company’s Environmental Policy, organised the Low-Carbon Development Project Office for working out in-house decarbonisation policies to be further built in the Company’s Development Strategy, and have come up with the corporate Low-Carbon Development Programme. We are faced with a great challenge of keeping up with high sustainable development standards. By making a choice in favour of a responsible approach to business, KazMunayGas once again demonstrates its commitment to global ESG goals,” said Alik Aidarbayev, Chairman of the Management Board.

In 2021, we are set to solve the important task of defining KMG’s potential for reduction of the carbon footprint and carbon intensity of production, subject to the impact of the domestic and international carbon regulation on the Company’s operations, and to future achievement of reduced carbon intensity objectives by implementing a package of the most efficient decarbonisation projects.

[1] Sustainalytics is a leading independent provider of environmental, social and corporate governance research, ratings and analysis that helps investors worldwide develop and implement informed investment strategies.

Mangistaumunaigas Has Its General Director Replaced

Fri, 22 Oct 2021 10:12:52 +0500

Dauletzhan Khassanov has been appointed the General Director of Mangistaumunaigas JSC by the resolution of the Board of Directors.

Mr. Khassanov was born on 21 October 1971. He graduated from West Kazakhstan Agricultural Institute with a degree in Economics and Atyrau Oil and Gas Institute with a degree in Mining Engineering.

He began his career as an accountant. It is more than 20 years that he has been working for the KazMunayGas Group. Over the years, he held executive roles at Embamunaigas JSC, Ozenmunaigas JSC, Kazgermunai JV LLP and Karazhanbasmunai JSC. Before joining Mangistaumunaigas, Mr. Khassanov had held the position of Director of the Oil and Gas Production Department at JSC NC “KazMunayGas”.

Zhakyp Marabayev, Deputy Chairman of JSC NC “KazMunayGas” Management Board, introduced the new executive to the company’s team. He noted that, despite the adverse external factors, the company has continued its progressive development during the recent three years and arranged for the achievement of the key performance indicators. For example, the production target was exceeded last year and amounted to 5.9 mln tonnes of oil.

Mangistaumunaigas’ former management also made much effort to prevent the spread of COVID-19 and ensure that the company’s employees are vaccinated as appropriate to reach the herd immunity.

At the same time, the new management has no less greater challenges to deal with — ensure further achievement of oil and gas production targets, improve the company’s performance and provide the best possible working conditions for all employees of Mangistaumunaigas.

It should be noted that the Mangistaumunaigas Shareholders’ Agreement provides for the alternation of the right to appoint top managers and unit managers every 3 years. Former General Director Liu Jingcheng had been in office since November 2018.

KazMunayGas to launch first hydrogen filling station in Kazakhstan

Tue, 12 Oct 2021 11:19:43 +0500

On 12 October 2021 JSC NC "KazMunayGas” (KMG), Atyrau Refinery LLP (AR) and Air Liquide Munay Tech Gases LLP (Air Liquide’s division) signed a Memorandum of Understanding, aimed to develop the hydrogen initiatives in the Republic of Kazakhstan for the purposes of the objective to achieve carbon neutrality.

The document contemplates collaboration between the parties for the arrangement of hydrogen filling stations (HFSs) for hydrogen fuel cell-powered vehicles, and provision of the HFSs with hydrogen of proper quality from Air Liquide Munay Tech Gases LLP’s existing plants at the AR. This technology has been introduced in Kazakhstan for the first time.

The pilot includes two stages. At the first stage the plans are to install a mobile hydrogen filling station in Atyrau and purchase hydrogen fuel cell-powered buses and cars for transporting the AR's employees until the end of March 2022.

Within the framework of the second stage, the plans are to complete the set of works for providing the HFSs with hydrogen of proper quality and launch a fixed hydrogen filling station in Atyrau jointly with Air Liquide Munay Tech Gases LLP by the end of 2022.

“Carrying out the instruction of the Head of State to achieve carbon neutrality by 2060, and generally following the worldwide trends, KazMunayGas views the development of hydrogen energy as one of the top-priority areas of the company’s Decarbonization Programme in the long term. Reducing the carbon footprint of the companies’ operations contributes not only to an increase in the asset value, but enhances our investment appeal as well”, chairman of KMG's Management Board Alik Aidarbayev stated.

Currently, KMG is updating its 2022-2031 development strategy and has approved the Low-carbon Development Programme. KMG has set a goal to reduce the CO2 emissions by 15% until 2031 against the level of 2019, which is around 1.6 mn tons of СО2.

Attainment of the said goal is planned through the implementation of actions to enhance energy efficiency and energy conservation, development of the renewable and hydrogen energy, use of the carbon capture and storage technology, implementation of afforestation-and-climate projects. KMG is already proceeding to the practical implementation of a pilot in hydrogen mobility for increasing the company’s potential in this area and using the generated hydrogen at its own assets.

Hydrogen fuel is an environmentally-friendly alternative to petrol and diesel, since the basic by-product of using it is water. Besides, hydrogen has a much better consumption rate than petrol has: as little as 0.6 kg per 100 km. A hydrogen filling station comprises a system for hydrogen storage, cooling, compressing, and dispensers.

The partner of the project, the globally-renowned French company Air Liquide, has mastered the entire hydrogen supply chain over the last 50 years: from generation to storage, distribution and development of applications for the end consumers. To this date, the company has designed and installed over 120 hydrogen filling station worldwide.

KazMunayGas and Chevron discuss implementation of Future Growth Project at Tengiz field

Mon, 11 Oct 2021 11:21:33 +0500

Alik Aidarbayev, Chairman of the Management Board of JSC NC "KazMunayGas” has held a meeting with James Johnson, Executive Vice President, Upstream at Chevron.

The parties discussed a wide range of matter of bilateral cooperation, including the progress of the Future Growth Project at Tengiz field.

“This is my first international trip since the beginning of the pandemic. I think it is absolutely deservedly that this visit is to Kazakhstan. Kazakhstan continues to play an important role to us, including investment matters, that's why we highly appreciate the opportunity to meet you face to face and discuss the matters of strengthening our cooperation”, James Johnson noted.

He stated that the implementation of the Future Growth Project is the focus of attention of Chevron's management. “From our part, we do everything possible to get the project completed within the approved budget and work schedule”, Chevron's Vice President asserted.

“KazMunayGas, as the country’s national oil and gas operator, also pays special attention to the implementation of the Future Growth Project. Certainly, the coronavirus pandemic has made its own adjustments, but we are happy that the project budget stays static. I would like to mention the well-coordinated work of Tengizchevroil's team during the pandemic, who accomplished this task with flying colours”, Alik Aidarbayev emphasized.

Additionally A. Aidarbayev and J. Johnson discussed the outlook of interfacing in the oil-and-gas chemistry sector.

Petromidia Refinery resumes operations following repair

Fri, 08 Oct 2021 09:43:08 +0500

Petromidia Refinery has resumed its operations following the incident that occurred on 2 July. As at 7 October, the capacity of the units has been brought 12.7 thousand tons per day.

In late September the majority of the repair works to resume the refinery operations at the highest level of safety was completed.

The schedule included a wide scope: check-up, repair and considerable replacement of the pipes were carried out, the necessary equipment restored.

The control-and-measuring instruments and automatic equipment, electric cabling were replaced, all elements and equipment, related to the operating safety, were checked at each unit, and the direct manpower were re-trained and re-attested.

Over 20 companies were involved in the works, and the total number of manpower, working on re-launching of the units, amounted to around 1,000 people (the employees of Rompetrol Rafinare, Rominserv and the specialists of the contracting companies).

The diesel hydrotreating unit that had sustained the greatest damage during the breakdown will be repaired in April 2022.

During the refinery shutdown, KMG International N.V. continued delivering fuel for Rompetrol stations in Romania and Black Sea region, remaining one of the biggest oil product suppliers.

Petromidia Refinery is the biggest oil refinery in Romania and one of the most state-of-the-art plants in the Black Sea and Mediterranean Sea region. It is within the group of KMG International N.V. (a wholly-owned subsidiary of KMG).

Samruk-Kazyna, KazMunayGas and SIBUR sign agreements on baseline conditions of cooperation on oil-and-gas chemistry projects in Kazakhstan

Thu, 07 Oct 2021 09:36:47 +0500

During the XIV KAZENERGY Eurasian Forum, Samruk-Kazyna Joint-Stock Company, National Company “KazMunayGas” and SIBUR signed agreements on the baseline conditions of cooperation on oil-and-gas chemistry projects on the territory of “National Industrial Petrochemical Park” Special Economic Zone in Atyrau.

According to the documents signed, the parties have established the terms and conditions of creating joint ventures on the premises of the integrated gas-based petrochemical complex. In particular, we are talking about the project for construction of a polyethylene production plant with the capacity of 1,250 thousand tons annually, and the polypropylene production plant with the capacity of 500 thousand tons annually, which is currently under construction. SIBUR's participatory interest in both joint ventures will be 40%.

SIBUR's participation in the joint ventures will be realized after all necessary regulatory endorsement are obtained and the polypropylene production complex is commissioned.

Chairman of Management Board of JSC NC "KazMunayGas” Alik Aidarbayev:

“Following the instruction of the nation's leadership, KazMunayGas is working on he creation of the national oil-and-gas chemistry industry. This year, on the threshold of the 30^thanniversary of Independence of the Republic of Kazakhstan, we are completing construction of a polypropylene production plant, schedules for start-up in early 2022. The next step of these efforts will be the implementation of the polyethylene production project. It should be noted that beginning to cooperate with SIBUR, we now have a reliable partner, possessing the necessary expertise and technology. Furthermore, this cooperation will enable opening additional market places for Kazakh products”.

Chairman of Management Board of PAO SIBUR Holding Dmitry Konov:

“SIBUR progressively develops the oil-and-gas chemistry business, and has a wealth of accumulated experience in creating, launching and operating world-scale petchem complexes. Our accumulated expertise in launching projects and operating world-scale polymer complexes, combined with the extensive experience of the Kazakh partners in the construction and operation of major industrial facilities in oil and gas up-, mid- and downstream will make it possible to strengthen the positions of our joint businesses on the global market, adding new competitive capacity to our asset portfolios. The launch of the new capacity will also promote growth in the domestic consumption of polymer products in Kazakhstan and other EAEU countries, and will strengthen export positions in the high added value products, driven by SIBUR’s available infrastructure and competencies”.

KazMunayGas: No Jet Fuel Deficit Expected on Domestic Market

Fri, 01 Oct 2021 09:40:23 +0500

JSC NC "KazMunayGas” would like to advise that the information on the presumed jet fuel deficit does not line up with reality.

We believe that Air Astana's apprehensions stem from the options to change the jet fuel production volumes in order to increase diesel outputs taking into account the current national domestic market situation, which were earlier considered by the RoK's Ministry of Energy.

Currently, KMG’s plans are based on maintaining jet fuel production in a sufficient volume, which, taking into account the accumulated reserves and the consumption level, fully satisfies the demand on the nation's domestic market.

In this context, no jet fuel deficit is anticipated in Kazakhstan.

KazMunayGas and Zarubezhneft sign agreement on intent to implement joint investment projects

Thu, 30 Sep 2021 04:07:08 +0500

Alik Aidarbayev, Chairman of Management Board, JSC NC "KazMunayGas", and Sergey Kudryashov, General Director of Zarubezhneft JSC, signed an agreement of intent to implement joint investment projects on 30 September in Nur-Sultan.

During the meeting, the parties discussed cooperation in geologic exploration and implementation of the state-of-the-art technology for maintaining oil rate plateau.

“KazMunayGas is actively cooperating with Russian oil and gas companies on a number of projects. We are always open to and welcome new partners, the more so as Zarubezhneft has a rich history and unrivalled expertise in overseas operations. I am confident that the document we have signed will be a foundation for successful future cooperation”, A. Aidarbayev noted.

“The Republic of Kazakhstan is a priority for us in terms of searching for new investment opportunities. We are bonded not only by territorial proximity and historical community, but also by high qualifications of the oil and gas sector professionals. By the way, the CIS region is of particular interest for Zarubezhneft from the perspective of development of joint projects. Since 2019, we have been successfully implementing a project in Uzbekistan together with the state-owned company Uzbekneftegaz,” says Sergey Kudryashov.

It should be noted that cooperation between the companies had been earlier discussed on the platform of St. Petersburg International Economic Forum-2021, where agreement on the analysis of the assets proposed to KazMunayGas for consideration had been reached.

Media Representatives See Implementation of TAZALYQ Environmental Project

Wed, 29 Sep 2021 04:14:19 +0500

TAZALYQ, a large-scale environmental project, is being actively implemented in Atyrau to improve the city’s environment. On 29 September, Atyrau Refinery held a press tour to tell journalists about the project that would have positive effect on the region’s environment.

It should be noted that TAZALYQ is implemented by JSC NC “KazMunayGas” together with Atyrau Refinery. The project involves upgrade of the mechanical treatment facilities and treated wastewater channel, reclamation of evaporation fields. The project is expected to be fully completed in late 2023.

“The majority of facilities for Phase 1 of the mechanical treatment facilities upgrade have been constructed. Thanks to the new treatment facilities, water intake from the river Ural will drop by 10%, and 15% of treated production wastewater will be reused by the plant,” Kanat Sagizbayev, Deputy Head of the Construction Management Unit, said during the press tour.

Oil sludge pre-treatment and dehydration units are being currently constructed and assembled. The second phase will include construction of equalizing reservoirs and a floatation unit. Phase 1 of construction will end in March 2022. The mechanical treatment facilities are to be fully completed in December 2022.

Apart from that, the work is in progress to reclaim the plant’s evaporation fields at Tukhlaya Balka with its territory divided into four sectors. Today, a separating dam between the city and the plant and Dam 1 between sectors 2 and 3 have been fully constructed, Dam 2 between sectors 3 and 4 is 95% complete.

Sector 1 has been completely drained, Sector 2 has been drained by 70%. After draining, the sectors will start to be reclaimed: grass mowing, ploughing followed by adding a special bio-product to the soil. The total area of the evaporation fields to be reclaimed is 860 ha. All four sectors are expected to be finally reclaimed in November 2023.

TAZALYQ also involves upgrade of Atyrau Refinery’s treated wastewater channel, which will be fully enclosed and prevent toxic pollutants from entering the environment. According to the project, the new enclosed channel will send treated effluents from Atyrau Refinery to the city’s sewage treatment facilities. The channel upgrade is expected to end in May 2022.

As was reported earlier, in June 2021, Atyrau Refinery and the European Bank of Reconstruction and Development entered into an agreement to fund TAZALYQ for up to USD 80 mln.

Atyrau and Shymkent Refineries will provide the domestic market with aviation fuel during the POCR's repair

Tue, 28 Sep 2021 04:05:24 +0500

During the shut-down of the Pavlodar Oil-Chemistry Refinery for the scheduled repair, production of aviation fuel in Kazakhstan will be maintained by other refineries.

In October the Atyrau and Shymkent Refineries will produce around 35 thousand tons of aviation fuel in aggregate. Taking into account the accumulated volumes, this will enable full satisfaction of the domestic market demand for aviation fuel.

We recall, the scheduled repair of the Pavlodar OCR will begin on 1 October. Reaching the refinery's operating parameters is planned by the end of October.

Head of KMG Holds Meeting Regarding President’s Instructions

Fri, 24 Sep 2021 04:03:52 +0500

On 24 September, Alik Aidarbayev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG), held a meeting regarding the implementation of instructions given by Kassym-Jomart Tokayev, President of the RoK, during his working visit to Mangistau region.

The meeting discussed the social situation among employees in the oil and gas sector. Mr. Aidarbayev issued instructions to strengthen the efforts to ensure social stability at KMG’s facilities and take timely measures to avoid labour disputes in the oil service companies acting as contractors for the subsidiaries.

Apart from that, the meeting concerned the company’s operations and implementation of social and infrastructure projects in the region.

“We need to rigorously fulfil the Kendirli desalination plant project and complete construction of the Astrakhan-Mangyshlak water pipeline. And, as instructed by the President, we will have to maximize the involvement of the region’s contractors and residents,” Mr. Aidarbayev emphasised.

The Head of KMG also focused on mature fields in Mangistau region, development of Kalamkas-offshore and Khazar fields with involvement of local contractors and manpower, and active participation in geological exploration in the region. Development of “green economy” in the region was discussed separately.

Fitch Ratings reaffirms NC KazMunayGas JSC long-term rating at BBB- with stable outlook

Wed, 22 Sep 2021 13:42:05 +0500

On 20 September 2021, the international rating agency Fitch Ratings (the “Agency”) has affirmed the NC KazMunayGas JSC's (the Company or NC KMG) Long-Term Issuer Default Rating (IDR) at 'BBB-' (one notch below the sovereign rating) with Stable Outlook.

NC KMG 's Standalone Credit Profile (SCP) of 'bb-' reflects the company's solid business profile and Fitch's expectations of gradual deleveraging, following an increase in leverage in 2020 due to the slump in oil prices caused by the coronavirus pandemic, the Agency reports.

Other factors that served as prerequisites for the affirmation of the rating are expectations of an improvement in creditworthiness, despite moderation in oil prices in the coming year. In addition, an improvement in the inflow of dividends from companies in which NC KMG has participation interests is projected.

The full text of the press release issued by the Agency is available here

On the Way towards Safe Sustainable Development

Mon, 13 Sep 2021 03:56:31 +0500

On 10 September, the 6^th Annual Health, Safety and Environment Forum of JSC NC “KazMunayGas” (KMG) General Directors called “On the Way towards Safe Sustainable Development” was held. The online event was attended by KMG’s members of the Board of Directors and management, general directors of subsidiaries and dependent entities (SDEs), representatives of Samruk-Kazyna JSC, government agencies and some of KMG’s foreign partners.

The purpose of the Forum is to assess the current status of health, safety and environment in the KMG Group, exchange experience in protecting the life and health of employees.

During the event, the performance in 2020 and the first half of this year was summed up.

In his speech, Alik Aidarbayev, Chairman of KMG’s Management Board, pointed out that people are the Company’s highest value.

“Our top priority is to preserve the life and health of everyone who works at our entities. I draw special attention of all executives of subsidiaries and dependent entities that their top priority is to ensure the safety of employees and reduce the accident rate. You must demonstrate leadership and show your commitment to occupational safety through your personal example,” A. Aidarbayev noted, urging KMG’s employees to strictly adhere to the fire and occupational safety rules and regulations.

Furthermore, the Head of KMG focused the participants’ attention on environmental issues. As part of the Year of Ecology announced in 2021 within the KMG Group, the Chairman of the Management Board called on the chief executive officers of subsidiaries and dependent entities to prioritise the environmental issues.

The Forum also discussed innovations in environmental regulation and civil protection legislation. Moreover, the drafters of the new Environmental Code of the Republic of Kazakhstan held an additional session to train members of the Board of Directors and the Management Board on this topic.

The key considerations of the low-carbon development of KMG were a separate topic for discussion. In particular, ENI’s experience in the field of renewable energy sources in Kazakhstan was considered, and Tengizchevroil LLP’s occupational injury prevention programme was studied.

It was also announced that KMG is joining Vision Zero, an international zero injury concept.

An award ceremony was held to recognise health, safety and environment achievements, and the results of the drawing competition “Ecology through the Eyes of Children” among the children of the KMG Group’s employees were summed up during the Forum.

KMG and TCO Agree to Supply Propane to Kazakhstan’s First Gas Chemical Complex

Fri, 10 Sep 2021 03:58:24 +0500

On Friday, 10 September, Daniyar Tiyessov, Deputy Chairman of JSC NC “KazMunayGas” Management Board for Oil Refining and Oil Chemistry, Chairman of KPI Inc. LLP Management Board, and Kevin Lyon, General Director of Tengizchevroil LLP, signed an agreement for the supply of propane from Tengiz field to the polypropylene plant in Karabatan.

The agreement signing ceremony was attended by Alik Aidarbayev, Chairman of KMG’s Management Board, and John Baltz, Managing Director of Chevron’s Eurasian Business Unit.

Let us recall that the construction of one of the largest plants over the years of the country’s independence commenced pursuant to the instruction of Yelbassy Nursultan Nazarbayev, the First President of the Republic of Kazakhstan. To date, the overall progress of the project has exceeded 90%, mechanical completion is expected at the end of this year.

According to the signed agreement, Tengizchevroil will supply raw materials to the polypropylene plant. The annual supplies will amount to 550 thousand tonnes of propane fraction. Gas will be supplied by rail. At the plant, the raw materials will be processed by the propane dehydrogenation unit to produce propylene, and further, the finished product — granular polypropylene — will be received at the polymerisation unit.

“Getting propane from Tengiz is a key aspect in implementing the project that is important for our country’s economy. The gas chemical complex under construction will accept the first batch of raw materials as early as this year. Currently, the builders of the new plant are entering the final stretch, and commissioning is scheduled for the first quarter of 2022. Cooperation between KMG and TCO goes back decades, and the agreement we signed today is another evidence of our commitment to a long-term and sustainable partnership,” Alik Aidarbayev said.

Kevin Lyon, General Director of Tengizchevroil, said: “This is an important stage in the partnership between TCO and KMG, which serves to strengthen our joint efforts to support the development of Kazakhstan’s petrochemical industry. TCO believes in the future of the republic’s petrochemical industry. We will keep on working closely with the Ministry of Energy and KMG under the projects that will contribute to the further industrial and economic development of the country.”

The polypropylene plant is to become the first fully digital facility in Kazakhstan. This will enable remote control of all processes at the plant from the city of Atyrau. All physical labour will be performed by robots, and operators will steer the process through smart digital video surveillance.

Of further note is the environmental friendliness of the facility that will use a closed water cooling cycle. All waste water from the plant will be treated and returned in the form of desalted, demineralised fire-fighting water, which will significantly reduce the overall water consumption.

Fire Occurs in Dormitory at Borankol Field, Mangistau Region

Mon, 06 Sep 2021 05:19:31 +0500

On 6 September, at around 4.55 a.m., Nur-Sultan time, a fire broke out in the two-storey dormitory of KazMunayTeniz LLP Offshore Oil Company at Borankol field in Mangistau Region.

As of now, the fire has been extinguished. Two fire crews of KazMunayTeniz’s fire safety service were involved in fighting the fire. The cause of the fire is being investigated.

According to preliminary information, two people died and three were injured (bruises and cuts) in the incident.

The management of the KazMunayTeniz branch moved out to the site. JSC NC “KazMunayGas” has deployed an emergency response centre led by Alik Aidarbayev, Chairman of the Management Board. The emergency response centre comprises employees of the relevant business units.

“We Take Pride in Being Oilmen!” JSC NC “KazMunayGas” Congratulates Oil and Gas Industry Workers

Fri, 03 Sep 2021 10:32:03 +0500

The first Sunday of September is traditionally celebrated in Kazakhstan as the Oil and Gas Industry Workers’ Day. It is a professional holiday for a wide range of oil and gas specialists − geologists and drillers, developers and constructors, transport workers and technologists − all those who have cast their lot with the oil and gas industry.

On the eve of the holiday, KazMunayGas held a special on-line event, where the KMG Group’s workers took part. On the occasion of this memorable date, honoured workers of the oil and gas industry were awarded special badges and certificates of commendation.

“From the bottom of my heart, I offer congratulations to all my colleagues on our professional holiday! For the 30 years of Independence, the oil and gas industry has gone a long way forward, and has become one of the national economy drivers. Everyone who works in Kazakhstan’s oil and gas sector makes a considerable contribution to the country’s development. It is not easy to be an oil worker. This occupation requires courage and diligence. I would like to take this opportunity to say thank you to all who work in Kazakhstan’s oil and gas industry. We can take pride in being oil industry workers!” said Alik Aidarbayev, Chairman of the Management Board of JSC NC “KazMunayGas”.

Aisha Yeleussinova, 3rd grade commercial oil operator of the oil processing and pumping shop in Zhetybaimunaygas Production Department of Mangistaumunaigaz JSC, was among those awarded.

“I have been working in the oil and gas sector since 1984. I would like to congratulate all oil and gas workers on their professional holiday. I am very grateful for this high distinction. Let me wish everyone health, happiness and welfare,” Aisha Yeleussinova said.

The oil and gas industry is the leading sector of Kazakhstan’s economy, which accounts for a considerable part of the country’s tax revenues and export receipts. It is also a sector of interest for most of direct foreign investments.

Importantly, National Company “KazMunayGas” produces 25% of oil and gas condensate and 15% of natural and associated gas in the country. Fifty-six percent of Kazakh oil goes through its trunk pipelines. Its share of oil refined by all Kazakh refineries is 81%.

The KMG Group is composed of KazTransOil, Ozenmunaigas, Embamunaigas, Karazhanbasmunai (50%), Mangistaumunaigaz (50%), JV Kazgermunai (50%), Kazmortransflot, Pavlodar Refinery, Atyrau Refinery, PKOP (50%), Caspi Bitum (50%), and other companies.

In the first six months of 2021, KMG’s enterprises produced 10.7 million tonnes of oil, 4.1 billion m³ of associated and natural gas, transported 36.9 million tonnes of oil and 46.4 billion m³ of gas. KMG’s refineries processed 9.7 million tonnes of raw hydrocarbons.

The company is one of the largest employers, with its personnel numbering over 60,000 people.

KazMunayGas and Shell Agree on Cooperation in Carbon Capture, Utilization and Storage

Fri, 03 Sep 2021 09:05:31 +0500

JSC “NC KazMunayGas (KMG) and Shell Kazakhstan B.V. (Shell) signed today a Memorandum of Cooperation in the area of CO2 Capture Utilization and Storage Technology (CCUS). The Signing Ceremony was attended by KMG Board Chairman Alik Aidarbayev and Senior Vice President and Shell Kazakhstan Country Chair German Burmeister.

The Memorandum provides for joint exploration of potential opportunities for implementation of the CCUS Pilot Project seeking to identify and develop the main criteria for carbon capture and utilization.

The Memorandum aims to strengthen the long-term mutually beneficial cooperation of the parties and to support Kazakhstan in its efforts to fulfill the commitments on reduction of greenhouse gas emissions undertaken by the Republic as part of the Paris Agreement.

As part of the Memorandum signed, Shell technical experts will share their international experience in implementing similar CCUS projects.

“The Head of State, Kassym-Zhomart Tokayev, has set an important mission to achieve the goal of carbon neutrality by 2060. JSC KMG upholds this goal by focusing on carbon capture, utilization and storage technologies (CCUS), as they play a vital role in this issue. Shell is vastly experienced in this field. Today's signing of the Memorandum stands as milestone in our strategic partnership”- Mr. Aidarbayev noted.

“We highly value the mutual understanding and cooperation developed over the years of Shell's presence in the Republic of Kazakhstan. Our company intends to strengthen its strategic partnership with KMG and the Republic of Kazakhstan. We are delighted that the Memorandum signed with KMG makes it possible to further contribute to the development of the country's oil and gas sector and support Kazakhstan’s efforts in its energy transition, an important task both for our companies and the country.”- Mr. Burmeister stated.

Republic of Kazakhstan is currently developing the country’s Low-Carbon Development Strategy until 2060. To that end and recognizing the importance of the climate agenda, KMG has also started elaborating a corporate Low-Carbon Development Program until 2031 setting target indicators, identifying key measures to achieve and explore the possibilities of using decarbonization technologies at their production assets.

Key Financial Indicators Show Steady Growth — KazMunayGas

Wed, 01 Sep 2021 10:26:57 +0500

The revenue of JSC NC “KazMunayGas” in the first six months of the current year was KZT 3.1 trillion, which is 38.5% higher than in the same period of the previous year. This is what Dauren Karabayev, Deputy Chairman of KMG’s Management Board, said during the on-line briefing at the platform of Samruk Aqparat Press Centre.

According to him, the results were positively impacted by the rise of prices for crude oil and oil product. The price of Brent crude oil in the reporting period averaged $65 per barrel, which is 62.2% higher than in the previous year.

In January-June, the company also generated a free cash flow of KZT 291 billion. Net profit equalled KZT 644 billion. EBITDA was KZT 1.1 trillion. i.e. 92.6% up from the previous year’s figure.

“EBITDA, net profit, free cash flow were better that in the first six months of 2020, and better than in the same period of pre-pandemic 2019. This became possible due to implementation of the anti-crisis programme in 2020, and the reduction in the operating and capital expenses,” Dauren Karabayev said.

According to his data, the consolidated general and administrative costs in the first six months of 2021 turned out 8% lower than in the same period of 2020, and 26% lower than in the first six months of 2019. CAPEX showed the maximum reduction in absolute and relative terms.

“In the reporting period, KazMunayGas, without its joint ventures, paid more than KZT 300 billion of taxes to the national budget. Apart from that, the company paid dividends to its shareholders in the amount of KZT 50 billion,” the Deputy Chairman of KMG’s Management Board added.

Dauren Karabayev noted that KazMunayGas was going on with its efforts aimed at achieving the “pre-pandemic” operating and financial results.

“While the operating performance is still lower than that before the crisis, we can see considerable improvement of the company’s financial indicators. Some of them have already exceeded the 2019 level. Nevertheless, we are going to stay focused. The company is doing its best to hold the costs down,” he summarised.

JSC NC KazMunayGas 1H 2021 financial results

Thu, 26 Aug 2021 11:43:09 +0500

Joint-stock (JSC) National Company (NC) KazMunayGas (“KMG” or Company), Kazakhstan's national vertically integrated oil and gas company, published its interim condensed consolidated financial statements according to International Financial Reporting Standards (IFRS) 34 “Interim financial statements” for the three and six months ended June 30, 2021, with the independent auditor’s report on review of interim financial information.

Key financial indicators for the first half of 2021[1]:

Revenue increased by 38.5% to 3,122 bln tenge (USD 7,360 mln) in the first half of 2021, compared to the same period of last year;
EBITDA was at 1,063 bln tenge (USD 2,507 mln) in the first half of 2021, up by 92.6% year-on-year;
The Company's net profit for the period increased 31-fold to 644 bln tenge (USD 1,519 mln) in the reporting period, compared to 21 bln tenge (USD 51 mln) in the first half of 2020. Net profit attributable to shareholders of the parent company amounted to 644 bln tenge (USD 1,518 mln);
FCF amounted to 291 bln tenge (USD 685 mln), compared to -5 bln tenge (USD -12 mln) in the first half of 2020;
The Company's net debt was at USD 5,533 mln as of 30 June 2021, having decreased by 10.2% from USD 6,162 mln at the end of 2020;
Total debt decreased by 0.6% to USD 9,629 mln as of 30 June 2021 compared to 31 December 2020.

	UoM	1H2021	1H2020	%
Dated Brent¹, average	$/bbl	64.98	40.07	62.2%
Exchange rate, average	KZT/USD	424.22	404.71	4.8%
Revenue	bln tenge	3,122	2,254	38.5%
Share in profit of JVs and associates, net	bln tenge	481	224	114.7%
Net profit	bln tenge	644	21	-
Net profit attributable to shareholders of the Parent Company	bln tenge	644	104	519.2%
EBITDA²	bln tenge	1,063	552	92.6%
Adjusted EBITDA³	bln tenge	704	344	104.7%
FCF⁴	bln tenge	291	-5	-
CAPEX (accrual basis)	bln tenge	167	243	-31.3%
CAPEX (cash basis)	bln tenge	153	227	-32.6%
Net debt⁵	bln tenge	2,367	2,594⁷	-8.8%
Total debt⁶	bln tenge	4,120	4,078⁷	1.0%
¹ Source: S&P Global Platts. ²EBITDA = Revenue plus Share in profit of JVs and associates, net, minus Cost of purchased oil, gas petroleum products and refining costs minus Production expenses minus General and administrative expenses minus Transportation and selling expenses minus Taxes other than income tax. ³ Adjusted EBITDA = Revenue plus Dividends JVs and associates, minus Cost of purchased oil, gas petroleum products and refining costs minus Production expenses minus General and administrative expenses minus Transportation and selling expenses minus Taxes other than income tax. ⁴Free Cash Flow = Net cash flow from operating activities minus Purchase of property, plant and equipment, intangible assets, investment property and exploration and evaluation assets plus Proceeds from the loan previously provided to Caspian Pipeline Consortium due to transfer of Kazakh pipeline assets to CPC-K. In 2020, CPC fully repaid the interest on the loan to KMG in the amount of 38 bln tenge. ⁵Net debt = Noncurrent borrowings plus Current borrowings minus Cash and cash equivalents minus Short-term bank deposits minus Long-term bank deposits. Guaranteed obligations are not included in the calculation. ⁶Total debt = Noncurrent borrowings plus Current borrowings. Guaranteed obligations are not included in the calculation. ⁷As of 31 December 2020.

Operating results for the first half of 2021:

Oil and gas condensate production amounted to 10,738 thous. tonnes as compared to 11,345 thous. tonnes in the first half of 2020;
The transportation volume of oil amounted to 36,949 thous. tonnes as compared to 37,328 thous. tonnes in the first half of 2020;
Transportation volume of gas increased by 2.7% to 46, 411 million m³ in the first half of 2021;
Hydrocarbons refining volumes at the Kazakh and Romanian refineries increased by 17.0% to 9,704 thous. tonnes in comparison with 8,290 thous. tonnes in the previous year.

	1H 2021 (net to KMG)	1H 2020 (net to KMG)	%
Oil production, thous. tonnes	10,738	11,345	-5.3%
Gas production, mln m³	4,079	4,321	-5.6%
Oil transportation, thous. tonnes	36,949	37,328	-1.0%
Gas transportation, mln m³	46,411	45,172	2.7%
Oil refining, thous. tonnes	9,704	8,290	17.0%

Operating results presented in accordance with KMG's ownership interest in joint ventures and associates and 100% of results for consolidated subsidiaries, unless specifically indicated otherwise.

For more information, please see the Trading Update for the first half of 2021:

https://www.kmg.kz/uploads/reporting-and-financial-result/operating-results/Operating_results_6M_2021_ru.pdf

Financial Highlights for the first half of 2021

Revenue

Revenue amounted to 3,122 bln tenge (USD 7,360 mln) in the first half of 2021, up by 38.5% vs. the same period of 2020. The positive impact on revenue dynamics was mainly attributable to an increase in average Dated Brent oil price by 62.2% year-on-year, weakening of the average exchange rate of tenge vs. the US dollar by 4.8% and increase in trading volumes of oil and oil products at KMG International N.V (KMGI). Revenue growth was restrained by the production restrictions at certain fields under the OPEC+ agreement and a decrease in the revenue of KazTransGas JSC (KTG) due to a decrease in the gas sale volumes for export, as well as the average price of gas sales.

Share in profit of joint ventures and associates

Share in the profit of joint ventures and associates increased from 224 bln tenge (USD 554 mln) in the first half of 2020 to 481 bln tenge (USD 1,134 mln) in the first half of 2021.

The following companies mainly supported the growth of a share in the profit: Tengizchevroil LLP (TCO) with 199 bln tenge (USD 469 mln), Asian Gas Pipeline LLP (AGP) with 121 bln tenge (USD 285 mln), KMG Kashagan B.V. with 31 bln tenge (USD 73 mln), Mangistau Investment B.V. (MMG) with KZT 27 bln (USD 63 mln) and Beineu-Shymkent Gas Pipeline LLP (BSGP) with 36 bln tenge (USD 85 mln) of net profit. According to the results of the first half of 2021, the accounting net loss was at Ural Group Limited (UGL) in the amount of 5 bln tenge (USD 12 mln), and Teniz Service LLP in the amount of 3 bln tenge (USD 7 mln).

EBITDA

EBITDA in the first half of 2021 was 1,063 bln tenge (USD 2,507 mln), demonstrating growth compared to 552 bln tenge (USD 1,364 mln) in the first half of 2020 due to an increase of segmented EBITDA in Exploration and production of oil and gas, Gas trading and transportation, Refining and trading of crude oil and refined products, and Corporate centre.

Adjusted EBITDA

Adjusted EBITDA, reflecting dividends received from joint ventures and associates, and not including share in the profit of joint ventures and associates in the first half of 2021 amounted to 704 bln tenge (USD 1,659 million), showing an increase of 104.7% year-on-year.

Net profit

The Company’s net profit increased from 21 bln tenge (USD 51 mln) in the first half of 2020 to 644 bln (USD 1,519 mln) in the first half of 2021 due to an increase in average oil price, increase in revenues and share in the profit of joint ventures and associates, as well as decline of production expenses, general and administrative expenses, and the absence of significant impairment of exploration and evaluation assets.

Net profit for the period attributable to shareholders of the Parent Company amounted to 644 bln tenge (USD 1,518 mln).

Cost of purchased oil, gas, petroleum products and other materials

Cost of purchased oil, gas, petroleum products and other materials increased by 50.0% year-on-year to 1,689 bln tenge (USD 3,981 mln) in the reporting period due to higher average price and volumes of oil purchases and weakening of the average exchange rate of tenge vs. the US dollar. This was partially offset by a decrease in the cost of purchased gas for resale and a decrease in the cost of petroleum products for resale. The purchased gas for resale decreased by 58.5% year-on-year and amounted to 85 bln tenge (USD 201 mln) in the first half of 2021.

Other expenses

In the first half of 2021, production expenses decreased by 3.6% year-on-year to 351 bln tenge (USD 827 mln) due to the reduction of short-term lease costs by 51.7% to 14 bln tenge (USD 32 mln).

Transportation and distribution costs increased by 5.4% year-on-year to 234 bln tenge (USD 552 mln) due to higher loading, transportation and storage costs.

General and administrative expenses decreased by 8.0% year-on-year to 69 bln tenge (USD 162 mln) because of a decline in expenses for consulting services, reversal of impairment of VAT receivable, and a decrease in labour costs mainly as a result of changes in the organizational structure at the KMG Corporate Center in 2020.

Taxes other than income tax increased by 41.7% year-on-year to 197 bln tenge (USD 465 mln) mainly due to higher average oil prices.

In the first half of 2021, finance costs, including interest expense on lease liabilities, were at 137 bln tenge (USD 323 mln), up by 1.5% year-on-year due to higher expenses on lease agreements, reflecting the new lease agreement for the Saryarka gas pipeline for 2021, and long-term office lease agreements and archival premises at KTG.

Capital expenditures

In the first half of 2021, capital expenditures (on an accrual basis, segment reporting) amounted to 167 bln tenge (USD 392 mln), down by 31.3% from 243 bln tenge (USD 602 mln) in the first half of 2020. Capital expenditures on a cash basis amounted to 153 bln tenge (USD 361 mln) with a decrease of 32.6% year-on-year. Capital expenditures decreased at KMGI due to scheduled overhaul in 2020, at KTG due to the completion of large investment projects in the reporting period of 2020, and at Atyrau Refinery due to the payment of arrears in the first half of 2020 for fixed assets related to the advanced oil refining complex, acquired in 2019.

Debt management

Debt indicators

	UoM	30 June 2021	31 December 2020	%
Bonds	bln tenge	2,996	2,978	0.6%
Loans	bln tenge	1,124	1,101	2.1%
Total debt	bln tenge	4,120	4,078	1.0%
Guarantee obligations under the syndicated loan of Beineu-Shymkent Gas Pipeline LLP	bln tenge	200	227	-11.9%
Guarantee obligations under the syndicated loan of AstanaGas KMG JSC	bln tenge	1.7	1.9	-10.5%
Total debt with guarantee obligations	bln tenge	4,322	4,308	0.3%

Numbers may not add up due to rounding.

Total debt was at 4,120 bln tenge as of 30 June 2021, having increased in tenge terms by 1.0% compared to 31 December 2020 (4,078 bln tenge), reflecting the change of tenge vs. the US dollar. Total debt in the US dollar terms was at USD 9,629 mln as of 30 June 2021, decreased by 0.6% compared to 31 December 2020 (USD 9,690 mln).

Total debt including guaranteed obligations[2] amounted to 4,322 bln tenge (USD 10,101 mln) as of 30 June 2021, increased by 0.3% in tenge terms (in the US dollar terms: a decrease of 1.3%) vs. 31 December 2020.

During the reporting period, Atyrau Refinery partially repaid a loan from the Export-Import Bank of China for USD 79 mln and fully repaid the loan from the Development Bank of Kazakhstan JSC for USD 142 mln. Atyrau Refinery received a long-term loan from Halyk Bank JSC for a total amount of 54 bln tenge with a maturity of 4 years to refinance existing loans. KMGI received a USD 50 mln short-term loan from Cargill, and a USD 44 mln short-term loan from Banque de Commerce et de Plasements to finance working capital. KMGI received a Syndicated loan used to finance its working capital for the total amount of USD 63 mln and made partial repayment for USD 10 mln, including accrued interest.

KMG's net debt amounted to 2,367 bln tenge (USD 5,533 mln) as of 30 June 2021, down by 8.8% in tenge terms compared to 31 December 2020 (in the US dollar terms: decrease by 10.2%).

Cash and cash equivalents

Consolidated cash and cash equivalents including deposits

	UoM	30 June 2021	31 December 2020	%
Cash and cash equivalents	bln tenge	1,445	1,146	26.1%
Short-term deposits	bln tenge	253	282	-10.3%
Long-term deposits	bln tenge	55	57	-3.5%
Cash and cash equivalents including deposits	bln tenge	1,753	1,485	18.0%

Consolidated cash and cash equivalents including deposits increased by 18.0% to 1,753 bln tenge as of 30 June 2021 vs. 31 December 2020. Consolidated cash and cash equivalents in the US dollar terms increased by 16.1% to USD 4,096 mln as of 30 June 2021 vs. USD 3,528 mln as of 31 December 2020.

The increase in cash and cash equivalents is mainly due to positive net cash flow from operating activities at 444 bln tenge (USD 1,046 mln), and lower capital expenditures compared to the same period last year.

Key corporate events from the beginning of 2021:

On 11 March 2021, KMG and Samruk-Kazyna JSC signed a trust management agreement for 100% of ordinary shares of KTG;
Starting from 30 March 2021, KMG Eurobonds for a total amount of USD 6.25 bln have been included in the official list of Astana International Exchange;
On 21 April 2021, KTG obtained a consent from the holders of Eurobonds with maturity in 2027 to change the terms of the bond issue prospectus under the memorandum of consent dated 30 March 2021;
On 30 April 2021, the international rating agency S&P Global Ratings affirmed KMG's credit rating at “BB” with a “negative” outlook;
On 3 June 2021, Atyrau Refinery and the European Bank for Reconstruction and Development have signed an agreement to provide an amount denominated in tenge totalling up to USD 80 mln for financing the TAZALYQ project;
On 4 June 2021, KMG and PJSC LUKOIL signed the Agreement on Purchase of 49.99% Interest in Al-Farabi Operating LLP;
On 16 June 2021, KMG received the consent of the holders of KMG Eurobonds with maturity in 2025, 2027, 2030, 2047, 2048 to bring them into line with the terms of the KMG Eurobonds 2020 issue;
After the announcement of dividends for 2020 in May 2021 in line with the decision of Samruk-Kazyna and the National Bank of Kazakhstan, as of 3 August, KMG paid dividends in full in the amount of 50 bln tenge (USD 118 mln), including dividends paid to Samruk-Kazyna in the amount of 45 bln tenge (USD 107 mln) and the National Bank in the amount of 5 bln tenge (USD 11 mln);
On 12 August 2021, the international rating agency Moody's Investors Service upgraded KMG's credit rating from Baa3 to Baa2 following the upgrade of the sovereign rating of Kazakhstan. The outlook has been changed from “positive” to “stable”.

[1] The amounts were converted to US dollars for user convenience at average exchange rates for respective periods (average USDKZT for the first half of 2021 and the first half of 2020 were at 424.22 and 404.71, respectively; USDKZT as of 30 June 2021 and 31 December 2020 were at 427.89 and 420.91, respectively).

[2] It includes nominal amounts of guaranteed obligations on a syndicated loan of Beineu-Shymkent Gas Pipeline (BSGP) in the amount of 200 bln tenge (USD 468 mln), guaranteed obligation on a loan of JSC “AstanaGas KMG” in the amount of 1.7 bln tenge (USD 4.0 mln).

KazMunayGas Publishes 2020 Sustainable Development Report: Heading for Low-Carbon Future

Thu, 26 Aug 2021 09:31:52 +0500

JSC NC “KazMunayGas” (KMG) annually publishes a Sustainable Development Report. This document is the company's message about its progress under the United Nations Global Compact and the achievement of the global Sustainable Development Goals.

This July, KMG's Board of Directors approved the verified 2020 Sustainable Development Report. The report was prepared in accordance with the GRI Standards, the international reporting standards in the field of sustainable development. It has undergone an independent audit process by an audit firm, as well as the Global Reporting Initiative materiality review - GRI Materiality Disclosures Service.

The 2020 Sustainable Development Report publishes the key indicators of the company's economic, environmental and social performance over 2018-2020, and includes data on the significant aspects of sustainable development: anti-crisis measures related to the COVID-19 pandemic, vocational health and safety, environmental protection, staff development, interaction with the local communities and assistance to the regions of the Company's presence. The report pays special attention to ESG-rating indicators and our initiatives to transition to a lower hydrocarbon future.

Recognizing the importance of taking into account the views of the stakeholders, we organize annual feedback on the Report. This practice will help improve the content of the Report, and promote the awareness of the issues of sustainable development among Company's staff and other stakeholders.

KMG Ranks First in PwC Kazakhstan Rating

Mon, 16 Aug 2021 05:59:58 +0500

JSC NC “KazMunayGas” was rated first among the Top 50 companies for disclosing non-financial information in the 2019 corporate performance reports. The rating action was carried out by PwC Kazakhstan, involving 107 organisations. The study assessed the quality and availability of ESG information in the annual reports and sustainability reports of Kazakh companies published in 2020.

The purpose of this rating is to provide more information on Kazakh business to the public and investors, increase the level of transparency, and give an impulse to the market to move faster using the practices of advanced countries.

The assessment criteria included such disclosure packages as sustainability management, social policy, environmental impact and corporate governance. Additionally, extra points were given for the clarity and quality of the presentation of information.

“Following the TOP-50 rating arrangements, we noted a positive trend demonstrating that organisations disclosing non-financial information strive to meet the best world practices and standards in their disclosures. The best companies in terms of disclosure were the ones working with foreign investors and lenders (including exporters, public companies and organisations with foreign participation),” the report notes.

“In its activities, KazMunayGas adheres to the highest sustainability standards. The company has implemented a corporate governance system that meets the best international practices and has established an effective dialogue with its stakeholders. In order to enhance the transparency of its ESG disclosures, since 2012, our company has been publishing annual reports in accordance with the GRI Standards. The 1^st place in the rating list proves that we are moving in the right direction,” notes Aisha Turebayeva, Director of KMG’s Strategy and Investment Portfolio Management Department.

The rating can be found at: https://www.pwc.com/kz/ru/esg-ds-report.html

We Need to Gradually Restore the Pre-Crisis Level of Oil Production — A. Aidarbayev

Mon, 16 Aug 2021 05:57:09 +0500

On 13 August, in Aktau, Alik Aidarbayev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG), held a visiting meeting with the heads of KMG’s subsidiaries and associated companies based in Mangistau region. The event was also attended by Mukhtar Mankeyev, Managing Director for Corporate Governance and Social and Labour Relations of Samruk-Kazyna JSC.

During the meeting, the operational and financial performance of KMG’s subsidiaries for the first half of 2021, budget execution, maintenance of social stability among staff members, as well as vaccination of employees were addressed. Specifically, the reports of Essen Uteyev, General Director of Ozenmunaigas JSC, Kalbai Izmukhanov, First Deputy General Director of Mangistaumunaigaz JSC, and Kuanyshbai Nurgaliyev, First Deputy General Director of Karazhanbasmunai JSC, were heard.

Special attention was paid to the issues of increasing the oil production due to the gradual lifting of restrictions under the OPEC+ agreement and achieving the pre-crisis production rates. In particular, Karazhanbasmunai JSC expects to restore the pre-crisis level of oil production as early as 2023. At the same time, the scope of geological and technical activities and construction is planned at the same level.

For H1 of the current year, the production targets of Mangistaumunaigaz JSC were exceeded by 4 thousand tonnes, with actual production of 2,891 thousand tonnes. The year-end oil production is expected at 5,925 thousand tonnes.

“The oil production forecast will, first of all, make it possible to preserve jobs and also ensure that the region’s oil service companies have the maximum scope of work,” — said Kalbai Izmukhanov.

Following the meeting, Alik Aidarbayev set a number of specific tasks for the heads of the companies to gradually increase the volume of oil production, maintain a favourable social environment in teams and prevent labour disputes, as well as strengthen the awareness-raising efforts for the vaccination of employees.

Moody’s Upgrades KazMunayGas Rating from Baa3 to Baa2 Following Kazakhstan’s Sovereign Rating Upgrade

Fri, 13 Aug 2021 05:55:09 +0500

On 12 August 2021, Moody’s Investors Service upgraded the JSC NC “KazMunayGas” (KMG) credit rating from Baa3 to Baa2 following the Kazakhstan’s sovereign rating upgrade. The outlook has been changed from positive to stable. KMG’s stand-alone credit rating has been affirmed at Ba2.

The KMG’s rating upgrade following the Kazakhstan’s sovereign rating upgrade indicates a strong relationship between KMG and the RoK Government, which is ready to provide the required state support where necessary, due to KMG’s strategic importance for the country.

Note that on 11 August 2021, Moody’s Investors Service upgraded the long-term sovereign rating of Kazakhstan from Baa3 to Baa2, with a stable outlook.

For the full version of the Moody’s Investors Service press release, please visit

https://www.moodys.com/research/Moodys-upgrades-ratings-of-five-Kazakhstani-GRIs-to-Baa2-outlook--PR_451902

Construction of the First Polypropylene Plant in Kazakhstan Completed by 90%

Thu, 12 Aug 2021 05:50:32 +0500

On Thursday, 12 August, Alik Aidarbayev, Chairman of the Management Board of JSC NC “KazMunayGas”, checked on the progress of construction of Kazakhstan Petrochemical Industries Inc. LLP’s polypropylene plant as part of his working trip to Atyrau region.

During the tour of the construction site of Phase I of the Integrated Gas Chemical Complex, the head of KMG visited the propane discharge rack, propane storage tank farm, main electric substation, propane dehydrogenation and propylene polymerization units as well as the storage and shipment facilities for finished products.

As Damir Ashimov, First Deputy Chairman of the Management Board of KPI Inc. LLP, has pointed out in his report, the current progress of plant construction stands at about 90%. General construction work is coming to an end, the installation and testing of interconnecting networks have been completed, about 28 thousand tonnes of metal structures and 435 thousand inches of technological pipelines have been installed, concrete work has also been completed. The long-lead items of equipment and basic equipment have been delivered. A total of 8,836 units of auxiliary equipment are being supplied from around the world.

In addition, the construction of the main substation has been completed, and electric power has been received from Karabatan Utility Solutions LLP’s gas turbine power plant as part of the preparation of the utility facilities. Hydraulic testing of reservoirs has been completed at the recirculated water supply unit. Active efforts are underway to mount a pumping station and a cooling tower.

In total, the construction project involves 3,500 people and about 100 vehicles. Once commissioned, the enterprise will create 586 new jobs.

During the site visit, commissioning and training of the plant personnel were also discussed. The head of KMG emphasised the importance of further keeping up with the construction work schedule.

“Currently, this is a unique project, unparalleled in our country, that will use advanced technologies and equipment. The plant’s capacity and future products will meet not only the demand for polypropylene in Kazakhstan’s market but export targets as well. In general, the future products of the plant will contribute to the development of related industries, such as the production of building materials and car industry, and increase the local content,” — said A. Aidarbayev.

Note that the plant will produce up to 500 thousand tonnes of polypropylene per year. At the initial stage, it is planned to produce 11 grades of polypropylene, in the future the product range will be increased to 65 grades.

Polypropylene is widely used in mechanical engineering, medicine, electrical engineering, in the production of pipes, consumer electronics, etc. For example, 254 billion medical masks or 3,145 km of polypropylene pipes (D = 25 mm, S = 2.3 mm) can be produced from 500 thousand tonnes of polypropylene.

The general EPC (Engineering, Procurement & Construction) contractor is China National Chemical Engineering Co. Raw materials for production will be supplied from the Tengiz field.

Satti Jack-up Rig Puts Out to Sea

Mon, 09 Aug 2021 11:45:41 +0500

An official ceremony took place on 9 August 2021 at the Marine Supply and Logistics Base of Caspian Drilling Company Ltd. (CDC) to mark the launch of Kazakhstan’s first jack-up rig called Satti.

“Today is a historic day for the Kazakh oilfield services market. Working together with such companies as CDC and British Petroleum will not only give us access to the best international practices, but will also position the Kazakh oilfield services market as a competitive operation providing high-quality services that meet the global standards,” said Askhat Duisaliyev, Director of Oilfield Services and Crude Hydrocarbon Utilization Projects Department at JSC NC “KazMunayGas”.

Completed in June 2021, the upgrade of the Satti JUR improved its technical characteristics and made it more competitive. Specifically, the bearing capacity of the rig was increased from 453 to 680 tonnes. At present, the JUR is capable of ensuring effective drilling of oil and gas wells more than 6,000 meters deep. The JUR will be used in the Shallow Water Absheron Peninsula (SWAP) project in the Azerbaijan sector of the Caspian Sea, which is operated by British Petroleum Absheron Limited.

Satti is the first rig built entirely in Kazakhstan in accordance with the global standards. KMG and SOCAR have earlier signed the Memorandum of Understanding and the Joint Operation Agreement, which provides for joint operation of the rig. The JUR is owned by KMG’s subsidiary KMG Drilling & Services LLP, and is operated by CDC.

JSC NC KazMunayGas 1H 2021 Trading Update

Fri, 30 Jul 2021 11:07:02 +0500

Highlights for the first half of 2021 in comparison with the first half of 2020:

Oil and gas condensate production amounted to 10,738 thous. tonnes as compared to 11,345 thous. tonnes in the first half of 2020;
The transportation volume of oil amounted to 36,949 thous. tonnes as compared to 37,328 thous. tonnes in the first half of 2020;
Transportation volume of gas increased by 2.7% to 46 411 million m³ in the first half of 2021;
Hydrocarbons refining volumes at the Kazakh and Romanian refineries has grown significantly to 9,704 thous. tonnes in comparison with 8,290 thous. tonnes in previous year.

	1H 2021 (net to KMG)	1H 2020 (net to KMG)	%
Oil production, thous. tonnes	10,738	11,345	-5.3%
Gas production, mln m³	4,079	4,321	-5.6%
Oil transportation, thous. tonnes	36,949	37,328	-1.0%
Gas transportation, mln m³	46,411	45,172	2.7%
Oil refining, thous. tonnes	9,704	8,290	17.0%

Operational results of the first half of 2021

Operating results presented in accordance with KMG's ownership interest in joint ventures and associates and 100% of results for consolidated subsidiaries, unless specifically indicated otherwise.

Upstream

The volume of oil and gas condensate production by KMG in the first half of 2021 amounted to 10,738 thous. tonnes (445 kbopd), showing a decrease of 5.3% compared to the first half of 2020. The volume of production of associated and natural gas decreased by 5.6% to 4,079 million m³.

Oil and condensate production, thous. tonnes	1H 2021 (net to KMG)	1H 2020 (net to KMG)	%
OMG	2,629	2,746	-4.3%
MMG	1,445	1,526	-5.3%
EMG	1,213	1,353	-10.3%
Tengiz	2,707	2,852	-5.1%
Kashagan	613	673	-8.9%
Karachaganak	539	562	-4.1%
Others	1,591	1,631	-2.5%
Total	10,738	11,345	-5.3%

Oil production at Tengiz decreased by 5.1% compared to the first half of 2020, amounting to 2,707 thousand tons (119 kbopd), and gas production declined by 4.2%, amounting to 1,505 million m³. A significant impact on the decline in oil production was made by the obligations assumed to limit production under the OPEC + agreement.

Oil production at Kashagan decreased by 8.9% to 613 thous. tonnes of oil (27 kbopd), while gas production decreased by 7.9% and amounted to 374 million m³. The decrease in production compared to the same period of the previous year was due to the assumed obligations to limit production under the OPEC + agreement.

Production of liquid hydrocarbons at Karachaganak decreased by 4.1% and amounted to 539 thous. tonnes (23 kbopd). Gas production amounted to 1,003 million m³ and decreased by 3.9% compared to the first half of 2020. The decline in production was due to restrictions on the intake of gas sent for processing to the Orenburg Gas Processing Plant, as well as due to a decrease in gas re-injection capacity due to high ambient temperatures in June this year.

Oil production at operating assets decreased by 5.2% to 6,878 thous. tonnes (275 kbopd) and gas production decreased by 8.0% to 1,196 million m³. The decrease in production volumes was mainly due to the assumed obligations to limit production under the OPEC + agreement, as well as a natural decline at production at mature fields.

Midstream

The volume of oil trunk pipelines and sea transportation in the first half of 2021 decreased by 1.0% to 36,949 thousand tonnes¹.

Oil transportation, thous. tonnes	1H 2021 (100%)	1H 2021 (net to KMG)	1H 2020 (net to KMG)	%
KazTransOil	20,428	20,428	21,510	-5.0%
Kazakhstan-China Pipeline	8,422	4,211	3,766	11.8%
MunaiTas²	1,919	979	686	42.8%
Caspian Pipeline Consortium	30,055	6,236	6,473	-3.7%
Kazmortransflot	5,095	5,095	4,894	4.1%
Total	-	36,949	37,328	-1.0%
1 Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation. 2 Munaitas is an equity-consolidated joint venture and transportation volumes are quoted at a 51% ownership interest.

The volume of oil transportation through trunk pipelines decreased by 1.8% and amounted to 31,854 thous. tonnes. The decrease in oil delivery volumes was due to the fulfillment of obligations by shippers to limit oil production under the OPEC + agreement. In turn, the overall reduction was partially offset by an increase in oil supply volumes towards Pavlodar petrochemical plant to ensure the required volumes in the domestic market.

Compared to the same period, the total volume of oil marine transportation in the first half of 2021 increased by 4.1% to 5,095 thous. tonnes. mainly due to the growth in volumes in the Black Sea which caused by revival of the global oil shipping market.

The volume of gas transported through the main gas pipelines of KMG in the first half of 2021 increased by 2.7% to 46,411 million m³. The increase was mainly due to the growth in transit flows from Turkmenistan to the Russian Federation and China, as well as an increase in gas consumption in the domestic market, in particular, in the southern regions of Kazakhstan. Along with this, there is a decrease in export volumes to Russia due to the redistribution of Karachaganak gas to the domestic market and a decrease in export volumes from Tengiz.

Gas transportation, mln m³	1H 2021 (100%)	1H 2021 (net to KMG)	1H 2020 (net to KMG)	%
Intergas Central Asia	31,012	31,012	30,982	0.1%
Asia Gas Pipeline	22,299	11,149	9,629	15.8%
Beineu-Shymkent Gas Pipeline	6,867	3,434	3,192	7.6%
KazTransGas Aimak	816	816	1,369	-40.4%
Total	-	46,411	45,172	2.7%

Trading

The volume of sales of KMG's own produced oil and gas condensate in the first half of 2021 decreased by 5.7% compared to the same period of last year and amounted to 10,791 thous. tonnes, of which 64.8% was exported.

Supplies to the domestic market of own produced oil and gas condensate amounted to 3,804 thous. tonnes, including supplies of crude oil from operating assets (Ozenmunaigas, Embamunaigas, Kazakhturkmunai and Urikhtau Operating) in the amount of 2,089 thous. tonnes to the Atyrau and Pavlodar refineries for further oil refining and sale of oil products.

Sales of marketable gas in the first half of 2021 increased by 2.9% compared to the first half of 2020 and amounted to 12,154 million m3 mainly due to increase in domestic consumption. Export of commercial gas reached 3,550 million m3, of which 95% was exported to China. Compared to the same period in 2020, there is a decrease in gas export volumes by 16.0% due to decrease in supply to Russia and China.

Downstream

Hydrocarbon refining, thous. tonnes	1H 2021 (net to KMG)	1H 2020 (net to KMG)	%
Atyrau refinery	2,587	2,633	-1.8%
Pavlodar refinery	2,876	2,056	39.9%
Shymkent refinery¹	1,105	1,135	-2.6%
Caspi Bitum	222	196	13.0%
Petromidia	2,726	2,116	28.9%
Vega	188	154	22.1%
Total	9,704	8,290	17.1%
[1] Shymkent refinery processing volume is indicated at a share of 50%

For the first half of 2021, the total refining volume compared to the first half of 2020 increased by 17.1% and amounted to 9,704 thous. tonnes:

Refining volumes at Kazakh refineries decreased by 12.8% and amounted to 6,789 tonnes. The increase happened due to an increase in the volume of refining at Pavlodar refinery, where overhaul this year is planned in the second half of the year, while last year, scheduled repairs were carried out in April-May. Along with this, at Pavlodar refinery in the first half of 2020, refining volumes were lower due to a decrease in demand for oil products in the domestic market;
The volume of refining at the KMG International refineries (Petromidia, Vega) in Romania amounted to 2,915 tonnes, which is 28.4% higher than in the first half of last year. The growth was due to the overhaul carried out at Petromidia in the first half of last year with the plant shutdown for the period of repair, as well as with a decrease in demand for oil products in the market.

In the first half of 2021, the volume of oil product production at Kazakh and Romanian refineries increased by 17.8% and amounted to 9,007 thous. tonnes demonstrating continued stable recovery in demand for oil products to pre-pandemic levels:

Kazakh refineries produced 6,181 tonnesof oil products, which is 14.2% more than the first half of last year.;
Plants of KMG International (Petromidia, Vega) produced 2,825 thous. tonnes of oil products, which is 26.6% higher than in the first half of 2020.

Alik Aidarbayev, Head of KMG, Holds Meeting with Igor Babushkin, Governor of Astrakhan Region

Mon, 26 Jul 2021 03:55:07 +0500

On 26 July, Alik Aidarbayev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG), met with Igor Babushkin, Governor of Astrakhan Region of the Russian Federation, in Nur-Sultan.

The parties discussed the issues of cross-border cooperation, including cooperation in the transport and logistics, oil and gas, and shipbuilding sector. The Russian delegation proposed that the Kazakh partners place orders for the construction of maritime facilities at Astrakhan shipyards.

“We have established international cooperation with Astrakhan Region in many areas. One of the key ones is the development of oil & gas potential in the Caspian. Our companies are engaged in the extraction and transportation of natural resources, and, of course, they order various vessels for these purposes. We will certainly consider various options for expanding our cooperation,” Alik Aidarbayev emphasized.

It should be noted that KMG's subsidiary, NMSC Kazmortransflot LLP (KMTF), has built 6 Caspianmax tankers with a carrying capacity of up to 12 thousand tons for transporting oil and petroleum products between the Caspian ports, and 8 platform barges with a carrying capacity of up to 3.5 thousand tons, which were involved in the construction of artificial islands during the development of Kashagan field. These tankers and platform barges were built at the Russian shipbuilding facilities. KMTF also carries out repairs and periodic docking of these vessels at ship-repair yards in Russia, including Astrakhan Region.

The head of Astrakhan Region told that today Astrakhan shipbuilding companies are able to build jack-up rigs, offshore fixed platforms, and vessels of any class and purpose, including ferries, bulk carriers and container ships, as well as dredgers and small passenger vessels.

The parties also emphasized the important role of Astrakhan Region in the system of international routes due to its access to the Caspian Sea. Today, the bulk of cargoes for major KMG projects passes through the logistics hub of Astrakhan Region.

It is worth mentioning that there are multidisciplinary cooperation agreements between Atyrau, Mangystau, West Kazakhstan and Astrakhan Regions. In 2020, the trade turnover between RoK regions and Astrakhan Region reached 13.4 million U.S. dollars.

KazMunayGas and Eni Agree on Alternative Energy Cooperation

Mon, 26 Jul 2021 03:53:14 +0500

On Monday, 26 July, Alik Aidarbayev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG), held a meeting with Claudio Descalzi, Chief Executive Officer of Eni. The parties discussed the prospects for cooperation and joint projects in the field of alternative energy.

“Over the past 6 years, Eni has invested €5 billion in the development of new technology for renewable energy sources, biofuels and other alternative energy innovations. We are willing to share our knowledge, technology and equipment with the Republic of Kazakhstan to further develop these areas,” C. Descalzi said.

He also pointed out that the carbon neutrality and decarbonization goals of Eni and KMG, and both countries in general, coincide.

“From this perspective, the memorandums to be signed today are another step towards these goals,” the CEO of Eni added.

For his part, Alik Aidarbayev noted the significant potential of joint renewable energy projects in Kazakhstan. Electricity generated there can be used at the facilities of KMG Group, among other things.

“Joint renewable energy projects will enable KMG to expand its share in the green energy sector, which is in line with the company's strategic goal to reduce the carbon footprint at its own production assets. We support common goals and are ready to move promptly in this direction,” A. Aidarbayev pointed out.

On the same day, KMG and Eni signed bilateral documents during the meeting of Askar Mamin, the Prime Minister of the Republic of Kazakhstan, with Claudio Descalzi. In particular, they signed a memorandum of cooperation in the development of energy transition projects for generation and sale of electric power.

The agreement is focused on cooperation in the field of renewable energy sources and green energy generation. The parties will conduct feasibility studies to identify projects for construction of wind and solar power plants, primarily to generate electricity for the production assets of KMG Group.

KMG and Eni also signed a memorandum of understanding on cooperation in and development of agricultural and hydrogen projects in the Republic of Kazakhstan.

The memorandum defines the framework for feasibility studies in the field of hydrogen production and agricultural projects related to the oilseeds cultivation in Kazakhstan for their subsequent processing and production of biofuels.

Eni will transfer knowledge through on-the-job training and mentoring involving Kazakh nationals and companies.

KazMunayGas to implement the requirements of the new Environmental Code

Fri, 23 Jul 2021 05:08:06 +0500

This year, KazMunayGas Group has planned a number of environmental safety actions and a comprehensive environmental impact assessment of its subsidiaries. One of the company's digitalization initiatives is a project to develop and implement the KMG automated environmental monitoring information system (AEMIS). The system is designed for full automation of environmental protection activities, in particular, collection, storage, processing, and analysis of environment status information. It will be accessible by the concerned employees of KMG Group.

The new Environmental Code implementation also includes launching a Single Environmental Portal in Kazakhstan to unite the entire national environmental data bank. The portal is one of the innovations of the RoK Ministry of Ecology, Geology and Natural Resources in regulating environmental protection.

“The Single Environmental Portal is an important platform for sustainable development of the country's operators. We see a huge opportunity in using the services of this portal for digitalizing the environmental protection processes and for sustainable development. It will automate business processes, such as waste and emission reporting, and facility environmental grading. Moreover, we consider integrating our AEMIS with the Single Environmental Portal in the future,” says Kairat Saktaganov, Director of KMG’s HSE Department.

The portal will significantly reduce the time to collect, process and prepare information for decision-making, streamline the information flow, directly or indirectly related to environmental protection, consolidate the reporting across all geographically dispersed subsidiaries, and will help optimise the environmental management costs.

It should be noted that the new Environmental Code of the Republic of Kazakhstan became effective on 1 July 2021.

In addition, 2021 has been declared the Year of Ecology in KMG Group in order to raise the environmental protection profile, reduce the environmental impact, and take measures to meet the new environmental requirements and follow the global trends.

Call for applications for the Best HSE Innovation Awards among the KazMunayGas Group employees

Fri, 23 Jul 2021 05:06:44 +0500

Any employee or unit of KMG Group can participate in the competition. The ideas will be reviewed by a special board in three rounds: by the subsidiaries of KMG Group in the first round, by the business units of KMG in the second round, and by the company's management in the third, final round.

Each application that has received a score of 9 or higher will be transferred to the review of the next level board until 3 winning applications are shortlisted.

The ideas will be rated according to the following criteria:

HSE leadership.
Scalability across all companies of KMG Group – scalability and implementability of the idea/practice.
Added value by reducing the production cost, risks, preventing incidents and avoiding liability for the consequences.

To participate in the competition, please fill out an application and send it to annual.hse.award@kmg.kz.

The deadline is 10 October 2021. Applications will then be registered and sent to the relevant companies of KMG Group to start the screening process.

Winners of the third round taking the 1^st, 2^nd and 3^rd places will be awarded as follows:

1^st place - Certificate of Honour issued by KMG Management Board Chairman and 500 MCIs

2^nd place - Certificate of Honour issued by KMG Management Board Chairman and 300 MCIs

3^rd place - Certificate of Honour issued by KMG Management Board Chairman and 100 MCIs

Winners will be announced at the end of the year.

Application for the annual Best HSE Innovation and Practice Award of the Management Board Chairman of JSC NC “KazMunayGas”

KMG won the Cbonds Awards CIS 2021

Thu, 22 Jul 2021 06:42:14 +0500

KazMunayGas won the Cbonds Awards CIS 2021 in the Best Primary Placement Deal (Kazakhstan) category. The award was given for the successful placement of 12.5-year Eurobonds for 750 million US dollars (yield – 3.5% per annum, maturity date – 14 April 2033). The bond proceeds were used by the company for the early repayment of Eurobonds for 907 million US dollars due in 2022 and 2023.

It should be noted that the yield on issued Eurobonds is historically lowest for KMG and among CIS issuers for newly issued Eurobonds with a tenor exceeding 10 years.

Cbonds is a news agency specialising in financial markets. Cbonds Awards CIS is an annual ceremony since 2014, where the best participants of the CIS bond market are awarded. Award winners are qualified by an open vote from among bond market participants. The awards had 13 categories in 2021.

Polypropylene Plant connected to the KUS grid

Wed, 21 Jul 2021 06:10:50 +0500

On 16 July, the 110 kW main step-down substation of the Integrated Petrochemical Complex (IPC) in Atyrau Region was connected to the grid of Karabatan Utility Solutions LLP. We recall that pre-commissioning and commissioning, as well as commercial operation of the IPC require timely power supply.

According to Rakhmetulla Kapanov, Deputy Chief Engineering Support Officer, test measurements to be followed by the 72-hour outage are currently in progress. Equipment is operating properly, rotational personnel of the project operator, KPI (Kazakhstan Petrochemical Industries Inc.), is full and ready, continuous control is kept jointly with the general construction contractor, CNCEC.

“After the outage, power will be supplied to the second transformer and then, provided the successful 72-hour outage, the plant can be qualified as fully connected to the grid. The next task is to distribute power from the substation to the entire plant so that dynamic and other equipment can be individually tested,” said Mr. Kapanov.

Now, it is safe to say that the first step of commissioning operations has been taken.

General Director of Atyrau Refinery Changed

Thu, 15 Jul 2021 12:03:09 +0500

The Management Board of JSC NC “KazMunayGas” has appointed Arman Kairdenov as the General Director of Atyrau Refinery LLP. Shukhrat Danbai, former Refinery director, was relieved of his post.

Arman Kairdenov was born in 1971 in Atyrau. He graduated from the Kazakh Chemical Technology Institute as a Chemical Process Engineer Technologist. In 2003, he graduated from the Academy of National Economy under the Government of the Russian Federation, majoring in oil business.

His career began in 1993 at Atyrau Refinery as a Process Unit Operator. He worked at the refinery for 13 years, taking various positions.

Over the years, he held positions of Deputy Director of Oil Refining Department of JSC NC “KazMunayGas”, Deputy General Director, General Director of Rompetrol Rafinare S.A. He was the General Director of Atyrau Refinery LLP in 2012-2013.

From July 2020, he has been the Director of Oil Refining and Petrochemical Department of JSC NC “KazMunayGas”.

Satti Jack-Up Drilling Rig Modification Completed

Tue, 13 Jul 2021 12:02:21 +0500

Caspian Drilling Company Limited has completed Satti Jack-Up Drilling Rig modification at its offshore supply and logistics base in Baku. JUR modification made it possible to increase its load capacity from 453 to 680 tonnes and, therefore, improve its competitiveness. The rig is currently capable of efficient drilling oil and gas wells deeper than 6,000 meters.

Satti Drilling Rig is the first drilling rig fully built in Kazakhstan in accordance with the international standards. Earlier, KMG and SOCAR signed a Memorandum of Understanding and Joint Operations Agreement that specify joint JUR drilling operations at the Absheron structure - Azerbaijan sector of the Caspian Sea. JUR is owned by KMG Drilling & Services LLP - KMG subsidiary.

Fire at Petromidia Refinery extinguished. Situation under control — KMG International

Fri, 02 Jul 2021 09:43:02 +0500

On Friday, July 2^nd, an incident resulted in fire occurred at the Petromidia Diesel Refinery, near Constanta – city in Romania.

Based on provisional information, the incident left five people injured and one person died, reported Iskander Abdibaitov, KMG International Corporate Development Director.

The company mobilised all the necessary resources, operational activities at the refinery were stopped, all personnel was evacuated in compliance with the internal crisis management regulation.

As of now, fire at the refinery has been extinguished. Fire Service and local authorities are working at the site. The situation is under control, said Mr. Abdibaitov.

We recall that Petromidia Refinery is the oil refinery plant owned by KMG International, Romania, and is located at the Black Sea coast.

Management of Samruk-Kazyna and KMG Visits Shymkent Refinery after Overhaul

Fri, 25 Jun 2021 10:52:38 +0500

On June 24th, as part of the working visit, Almassadam Satkaliyev, Chairman of the Samruk-Kazyna JSC Management Board, and Alik Aidarbayev, Chairman of JSC NC “KazMunayGas” Management Board, visited the Shymkent Refinery of PetroKazakhstanOil Products LLP.

The overhaul was carried out for the first time in 3 years after the upgrade has been completed. The primary scope of work at the Shymkent Refinery included a new heat exchanger installation and replacement of furnace nozzles with the more energy-efficient versions. Overall, from May 6th to June 4th of this year, 2000 items were repaired, with almost 1800 people mobilized for overhaul. Industrial safety examination and technical certification of equipment were conducted.

The large-scale upgrade of the Shymkent Refinery lasted from 2014 till 2018. As a result, the yield of light oils grew from 58% to 83%, the conversion ratio increased from 73 to 88.7%. Nelson complexity index of the refinery grew from 4 to 8.2.

The refining capacity grew by 28%: from 4.7 mn tonnes to 6 mn tonnes of oil annually. Better technical parameters improved the high-octane gasoline yield by 157%, from 881 thousand to 2.2 mn tonnes; diesel fuel yield grew by 58%, to 1.9 million tonnes; jet fuel yield grew by 42%, to 400 thousand tonnes.

The products meet the K4, K5 quality standards; the cold filter plugging point of winter diesel is −23 °C.

The Shymkent Refinery produces about 30% of the total petroleum products in Kazakhstan. PetroKazakhstan Oil Products LLP is managed on a parity basis: by National Company “KazMunayGas“ and China National Petroleum Corporation. In 2020, oil refining volumes reached 4.8 mn tonnes.

Every 5th KazMunayGas Group Employee Vaccinated

Wed, 23 Jun 2021 04:27:23 +0500

More than 13 thousand employees, or 20% of the KazMunayGas Group total employees, have been vaccinated against COVID-19. Among them, almost 6 thousand employees, or 9% of the total number, have been fully vaccinated (with both components).

It should be noted that the Company provides two paid days off (assuming they are business days) for each of the two components received. In addition, the employees who have received both components of the vaccine have unhindered access to the fields without having to undergo PCR tests.

All the necessary conditions have been created at KMG’s enterprises: vaccination posts are arranged in the central offices, at dedicated locations in the fields, and in medical centres at the place of residence. The employees may choose between Kazakh QazVac, Chinese Hayat-Vax or Russian Sputnik-V at their own discretion.

Fire Effects at KazGR Eliminated, Plant Operating at Full Capacity — KazMunayGas

Wed, 23 Jun 2021 04:26:21 +0500

The Kazakh Gas Refinery has completed elimination of the fire effects, the plant operation has been fully recovered.

Nakbergen Tulepov, Director of KazGR, related the activities performed to launch the plant at full capacity as soon as practically possible.

According to him, 75 specialists were involved in the recovery activities, working around the clock in three shifts. Parts of the damaged structures and auxiliary equipment were dismantled. New radiators, heat exchangers, fans, electric motors were installed, electrical wires run, etc.

“Thanks to well-coordinated efforts of the team and the support of KazMunayGas, we managed to promptly eliminate the fire effects and completely recover the operation of our plant,” N. Tulepov noted.

The recovery works made it possible to ensure 100% feed gas intake. The plant has reached its regular operating parameters — 95-100 thousand cubic meters of gas per hour.

Let us recall that on 16 June at 23:15 (Nur-Sultan time) the compressor shop air cooler caught fire at the Kazakh Gas Refinery LLP in the town of Zhanaozen, Mangystau Region. By 23:52, the fire had been completely extinguished. There were no casualties or injured. National Company “KazMunayGas” deployed an emergency response centre headed by Alik Aidarbayev, Chairman of the Management Board.

Taras Khituov, JSC NC "KazMunayGas" Ombudsman, Passed Away

Mon, 21 Jun 2021 03:49:06 +0500

On 21 June 2021, Taras Khituov, Ombudsman of National Company "KazMunayGas", passed away at the age of 57.

Mr. Khituov was born on 4 February 1964 in the Mangistau Province. He began his career as a simple worker and managed to achieve significant career growth. He put all his efforts and knowledge into the development and strengthening of the sovereign Kazakhstan.

He took various responsible positions, was Deputy Akim of Aktau, held senior positions at KazMunaiGas Exploration and Production, Ozenmunaigas and Karazhanbasmunai. Mr. Khituov was elected as a Deputy of the VI Convocation of the Majilis of Kazakhstan's Parliament.

Since this February, he had served as Ombudsman for National Company "KazMunayGas". In this position, Mr. Khituov had impeccably safeguarded the interests of the employees and the Company, enjoyed a well-deserved authority and respect among his colleagues.

Mr. Khituov was known for his particular sense of decency, hard work and kindness. We will cherish the memory of him in our hearts forever.

We express our heartfelt condolences to the family and close ones of Taras Khituov on his untimely demise.

Staff of JSC NC "KazMunayGas"

Alik Aidarbayev, Head of KMG, Reviews Progress of Recovery Work at KazGPP

Fri, 18 Jun 2021 03:37:57 +0500

On 17 June, Alik Aidarbayev, Chairman of the Management Board of JSC NC "KazMunayGas", visited Kazakh Gas Processing Plant LLP in Zhanaozen, where a fire had occurred.

The head of KMG inspected the production line of the plant and reviewed the progress of the recovery work. At the plant, Mr. Aidarbayev held a working meeting with participation of A. Mendibayev, Senior Deputy Akim of Mangystau region, M. Ibagarov, Akim of Zhanaozen, CEOs of KazGPP LLP, Ozenmunaigas JSC and Mangistaumunaigaz JSC.

At the meeting, the measures taken to eliminate the effects of the fire were discussed, and a number of specific instructions were given to prevent such emergency situations.

It was also noted that the fire at the plant had not affected the level of oil production from the fields of Mangistaumunaigaz JSC and Ozenmunaigas JSC.

Alik Aidarbayev expressed his gratitude to the fire personnel, and the teams of KazGPP and Ozenmunaigas JSC for coordinated actions during the fire response operations.

"Now it is necessary to complete all recovery work as soon as possible and ensure full intake of gas at the plant," he noted.

It should be recalled that an emergency response centre has been deployed at KMG. Currently, work is underway to eliminate the effects; the exact causes of the fire being investigated.

Director of KazGPP on Plant Fire: No Leak of Chemicals

Thu, 17 Jun 2021 03:35:51 +0500

Nakbergen Tulepov, Director of Kazakh Gas Processing Plant LLP, commented on the fire at the enterprise, which had occurred on Wednesday, 16 June.

"Yesterday at 22:15 local time, an air cooling apparatus in the compressor shop caught fire. We took immediate measures to contain and extinguish the fire. Gas intake was stopped and the plant underwent complete emergency shutdown. Our own fire brigades and emergency department forces were deployed to put out the fire. At 22:52, the fire was completely extinguished. Fortunately, there are no victims or injured," said Mr. Tulepov.

According to him, at 23:30 the technicians began to launch the plant in the limited mode. Currently, the plant's workload is about 30 percent. Recovery work continues to bring it to the full capacity.

Mr. Tulepov also noted that it was only the supporting structure of the air cooling apparatus that was damaged as a result of the fire. The main equipment was not damaged.

In addition, KazGPP’s Director denied the rumours circulating in social networks about a leak of chemicals during the incident. He stressed that there was no cause for concern.

"This equipment is used to cool the raw gas using the air-water method, that is, with ordinary water and air. The equipment does not use any chemicals. Therefore, I can tell with all responsibility that there is no threat to lives and health of both the personnel and the local community," assured Mr. Tulepov.

In his opinion, the plant's operation will be fully recovered in the nearest future and no failures in supply of liquefied petroleum gas are expected.

KazMunayGas: Fire at KazGPP Contained, No Victims or Injured

Wed, 16 Jun 2021 12:34:00 +0500

At 23:15 (Nur-Sultan time) on 16 June, an air cooler ignited in the compressor shop of the Kazakh Gas Processing Plant LLP in the town of Zhanaozen, Mangystau region.

In order to prevent the spread and reoccurrence of fire, the gas supply was cut off and the plant underwent complete emergency shutdown.

The fire was completely extinguished at 23:52. There were no victims or injured. Five fire brigades of KazGPP, Ozenmunaigas JSC and the regional emergency department were deployed to fight the fire.

There is no threat to the life and health of personnel or residents of Zhanaozen and nearby settlements.

The fire effects are being currently eliminated, and the causes of the fire investigated.

An emergency response centre has been deployed at JSC NC "KazMunayGas" under the leadership of Alik Aidarbayev, Chairman of the Management Board. The staff of the emergency response centre includes the employees of the relevant business units.

JSC NC “KazMunayGas” announce results of the consent Solicitation in respect of the notes, in each case issued by JSC NC “KazMunayGas” under the global medium term note programme of JSC NC “KazMunayGas”

Wed, 16 Jun 2021 12:08:55 +0500

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO, OR TO ANY PERSON LOCATED OR RESIDENT IN, ANY JURISDICTION WHERE IT IS UNLAWFUL TO RELEASE, PUBLISH OR DISTRIBUTE THIS ANNOUNCEMENT OR THE MEMORANDUM (AS DEFINED BELOW).

16 June 2021

JSC NC “KAZMUNAYGAS” AND KazMunaiGaz FINANCE SUB B.V. ANNOUNCE RESULTS OF THE CONSENT SOLICITATION IN RESPECT OF THE U.S.$500,000,000 4.750% Notes due 2025, U.S.$1,000,000,000 4.75% Notes due 2027, U.S.$1,250,000,000 5.375% Notes due 2030, U.S.$1,250,000,000 5.75% Notes due 2047 and U.S.$1,500,000,000 6.375% Notes due 2048, IN EACH CASE ISSUED BY JSC NC “KAZMUNAYGAS” UNDER THE GLOBAL MEDIUM TERM NOTE PROGRAMME OF JSC NC “KAZMUNAYGAS” AND KazMunaiGaz FINANCE SUB B.V.

Capitalised terms used in this announcement but not defined herein have the meaning given to them in the consent solicitation memorandum in respect of the Solicitation (as defined below) dated 24 May 2021 (the “Memorandum”).

On 24 May 2021, JSC NC “KazMunayGas” (the “Issuer”) and KazMunaiGaz Finance Sub B.V. (“KMG Finance”) announced their invitations to each holder of the:

S.$500,000,000 4.750% Notes due 2025 (Reg S ISIN: XS1807299174; Rule 144A ISIN: US48667QAR65) (the “2025 Notes”) of which U.S.$500,000,000 remains outstanding;
S.$1,000,000,000 4.75% Notes due 2027 (Reg S ISIN: XS1595713782; Rule 144A ISIN: US48667QAN51) (the “2027 Notes”) of which U.S.$1,000,000,000 remains outstanding;
S.$1,250,000,000 5.375% Notes due 2030 (Reg S ISIN: XS1807300105; Rule 144A ISIN: US48667QAQ82) (the “2030 Notes”) of which U.S.$1,250,000,000 remains outstanding;
S.$1,250,000,000 5.75% Notes due 2047 (Reg S ISIN: XS1595714087; Rule 144A ISIN: US48667QAP00) (the “2047 Notes”) of which U.S.$1,250,000,000 remains outstanding; and
S.$1,500,000,000 6.375% Notes due 2048 (Reg S ISIN: XS1807299331; Rule 144A ISIN: US48667QAS49) (the “2048 Notes”) of which U.S.$1,500,000,000 remains outstanding,

(each, a “Series” and, together, the “Notes”),

to consent to certain proposed amendments being sought (the “Solicitation”) to (i) the terms and conditions of the 2025 Notes, (ii) the terms and conditions of the 2027 Notes, (iii) the terms and conditions of the 2030 Notes, (iv) the terms and conditions of the 2047 Notes, (v) the terms and conditions of the 2048 Notes and (vi) the provisions of the trust deeds constituting the 2025 Notes, the 2027 Notes, the 2030 Notes, the 2047 Notes and the 2048 Notes, all as more fully described in the Memorandum (the “Proposal”).

The Solicitation was made on the terms and subject to the conditions set forth in the Memorandum.

The Issuer and KMG Finance hereby give notice to Noteholders that the Extraordinary Resolutions in respect of each of the 2025 Notes, the 2027 Notes, the 2030 Notes, the 2047 Notes and the 2048 Notes set out in the Notices of Meetings dated 24 May 2021 were duly passed at the Meetings held today. The effectiveness of the Extraordinary Resolutions is subject to the execution of the supplemental trust deeds in respect of each such series of Notes on today’s date.

As of the relevant Voting Deadlines in respect of the Proposal of:

10:00 a.m. (London time) on 14 June 2021 in respect of the 2025 Notes;
10:15 a.m. (London time) on 14 June 2021 in respect of the 2027 Notes;
10:30 a.m. (London time) on 14 June 2021 in respect of the 2030 Notes;
10:45 a.m. (London time) on 14 June 2021 in respect of the 2047 Notes; and
11:00 a.m. (London time) on 14 June 2021 in respect of the 2048 Notes,

the Issuer and KMG Finance had received Voting Instructions in respect of the Proposal as set out below (including Voting Instructions received in favour of the Proposal on or prior to the Early Consent Deadline of 5:00 p.m. (Eastern Standard Time)/10:00 p.m. (London time) on 7 June 2021).

Description of the Notes	Outstanding Principal Amount	Total Voting Instructions Received in favour of the relevant Extraordinary Resolution on or prior to the relevant Voting Deadline (in principal amount of Notes)	Percentage of Outstanding Notes in respect of which Voting Instructions have been received in favour of the relevant Extraordinary Resolution	Voting Instructions Received in favour of the relevant Extraordinary Resolution by the Early Consent Deadline (in principal amount of Notes)	Indicative Early Consent Fee (per U.S.$1,000 of Qualifying Notes)¹
The 2025 Notes	U.S.$500,000,000	U.S.$459,842,000	91.97%	U.S.$459,842,000	U.S.$5.22
The 2027 Notes	U.S.$1,000,000,000	U.S.$865,106,000	86.51%	U.S.$864,906,000	U.S.$7.63
The 2030 Notes	U.S.$1,250,000,000	U.S.$1,174,378,000	93.95%	U.S.$1,174,078,000	U.S.$9.28
The 2047 Notes	U.S.$1,250,000,000	U.S.$1,166,846,000	93.35%	U.S.$1,166,846,000	U.S.$15.51
The 2048 Notes	U.S.$1,500,000,000	U.S.$1,419,609,000	94.64%	U.S.$1,419,609,000	U.S.$15.36

1 These are illustrative figures only and are rounded to the nearest cent per U.S.$1,000 in principal amount of Qualifying Notes. The actual amount of the Early Consent Fee to be received by each Qualifying Noteholder will be paid without any rounding adjustments.

The Issuer intends to pay the relevant Early Consent Fees for Notes in respect of which Voting Instructions in favour of the Proposal were received on or prior to the Early Consent Deadline on the Settlement Date of 18 June 2021.

The Solicitation Agents in respect of the Solicitation are:

J.P. Morgan AG

Taunustor 1 (TaunusTurm)
60310 Frankfurt am Main
Germany

Attention: EMEA Liability Management Group

Email: em_europe_lm@jpmorgan.com

J.P. Morgan Securities plc

25 Bank Street

Canary Wharf

London E14 5JP

United Kingdom

Attention: EMEA Liability Management Group

Email: em_europe_lm@jpmorgan.com

UBS AG London Branch

5 Broadgate
London EC2M 2QS
United Kingdom

Attention: Liability Management Group

Telephone (US): (collect) +1 (203) 719-4210; (toll free) +1 (888) 719-4210

Telephone (UK): +44 20 7568 1121

Email: ol-liabilitymanagement-eu@ubs.com

The Tabulation Agent in respect of the Solicitation is:

Lucid Issuer Services Limited

Tankerton Works

12 Argyle Walk

London WC1H 8HA

United Kingdom

Attention: David Shilson

Telephone; +44 207 704 0880

Email: kmg@lucid-is.com

Website: https://portal.lucid-is.com

This announcement is made by:

JSC NC “KazMunayGas”
8, Kunayev Street

Nur-Sultan 010000
Kazakhstan

KazMunaiGaz Finance Sub B.V.

Strawinskylaan 807

Tower A-8
1077 XX Amsterdam
The Netherlands

DISCLAIMER

This announcement must be read in conjunction with the Memorandum. This announcement and the Memorandum contain important information which should be read carefully. If you are in any doubt as to the contents of this announcement or the Memorandum, you are recommended to seek your own financial and legal advice, including in respect of any tax consequences, immediately from your stockbroker, bank manager, legal adviser, accountant or other independent financial adviser. This announcement is for informational purposes only.

None of the Solicitation Agents, the Tabulation Agent or the Trustee (or their respective affiliates, directors, officers, employees and agents) have separately verified the information contained in the Memorandum and none of the Solicitation Agents, the Tabulation Agent or the Trustee, their affiliates or their respective directors, officers, employees or agents makes any representations, warranties, undertakings or recommendations whatsoever (express or implied) regarding the Memorandum or the Solicitation and none of such persons accepts any liability or responsibility as to the accuracy or completeness of the information contained in the Memorandum or any other information provided by the Issuer or KMG Finance in connection with or in relation to the Solicitation or any failure by the Issuer or KMG Finance to disclose material information with regard to the Issuer, KMG Finance or the Solicitation. The Tabulation Agent is the agent of the Issuer and KMG Finance and owes no duty to any Noteholder.

The President receives Chief Executive Officer of “KazMunayGas” JSC NC Alik Aidarbayev

Tue, 08 Jun 2021 03:31:22 +0500

Kassym-Jomart Tokayev heard a report on the results of the national company’s activities for 2020 and the development strategy for the medium term.

Alik Aidarbayev informed the President that amid the crisis, KazMunayGas has maintained its financial stability and is currently working to achieve “pre-pandemic” indicators.

President Tokayev was informed about the current status of the “Abai”, “Isatai”, “Zhenis”, “Al-Farabi” subsurface investment projects on the Caspian shelf. Alik Aidarbayev also reported on the work progress on petrochemical projects for the production of polypropylene, polyethylene and butadiene, as well as about the plans for the development of renewable energy sources and decarbonization of the company's activities.

The CEO of KazMunayGas also told the Head of State about the socially significant projects implemented by the national company, in particular, about the reconstruction of the main water pipeline “Astrakhan-Mangyshlak” and the construction of a desalination plant in the village of Kendirli, Mangystau region.

In conclusion, Kassym-Jomart Tokayev gave Alik Aidarbayev a number of instructions aimed at further maintaining national company’s financial stability, implementing investment and infrastructure projects, and using renewable energy sources. The Head of State also instructed to keep under control the issues of employment and social well-being of the company’s production staff.

KazMunayGas and LUKOIL Sign a Purchase Agreement on Al-Farabi Project

Fri, 04 Jun 2021 21:11:00 +0500

On 4 June 2021 JSC NC "KazMunayGas” (KMG) and PJSC LUKOIL (LUKOIL) signed the Agreement on Purchase of 49.99% Interest in Al-Farabi Operating LLP's Charter Capital. The event was held during the St. Petersburg International Economic Forum.

After the transaction is closed, KMG and LUKOIL’s stakes in the joint venture will be 50.01% and 49.99%, respectively.

Cooperation on the Al-Farabi project is financed on the carry terms, the costs attributable to KMG's interest are borne by the strategic partner. In case of commercial production, the costs will be reimbursed from KMG's further profit from the project.

Al-Farabi area is located in the Kazakhstan sector of the Caspian Sea. Distance to shore is 130 km, water depth: 300-600 m. According to the base minimum work, drilling of 1 well (2,500 m) and 3D seismic acquisition (120 km²) are in the plans.

“KazMunayGas and LUKOIL |are bonded by long-lsating strategic cooperation and good partner relations. Big efforts are led jointly with LUKOIL on the Al-Farabi site. I am confident that our cooperation will be promoted year by year, and our joint projects will be successful. On the whole, I can say that today KazMunayGas is continuing active implementation of the Caspian shelf subsoil use investment projects, such as Abai, Issatai, Zhenis, Al-Farabi, and oil and gas chemistry projects for production of polypropylene, polyethylene and butadiene”, Alik Aidarbayev, Chairman of KMG's Management Board, noted.

Alongside with that, oil and gas chemistry projects, being implemented in Kazakhstan, were discussed during the meeting.

KMG and LUKOIL are carrying out joint operations on the Zhenis, Khvalynskoye, Centralnaya projects, participate in the Tengiz and Karachaganak megaprojects, as well as in the Caspian Pipeline Consortium oil transportation project.

KMG and EDB Sign Cooperation Agreement on Astrakhan – Mangyshlak Water Main Reconstruction Project

Fri, 04 Jun 2021 11:13:00 +0500

On 4 June, JSC NC “KazMunayGas” (KMG), KazTransOil JSC, Magistralny Vodovod LLP and the Eurasian Development Bank (EDB) during the St. Petersburg International Economic Forum signed an cooperation agreement in respect of arrangement of financing for the “Astrakhan – Mangyshlak Water Main Upgrade and Expansion” project (Phase I). Under this agreement, the final terms of possible cooperation within the framework of the project will be further discussed between the parties.

The Astrakhan – Mangyshlak water main is the only centralised source of water supply for consumers in Kurmangazy, Isatay and Zhylyoi districts of Atyrau region, as well as for the town of Zhanaozen and the Beineu, Mangistau, Karakiya and Tupkaragan districts of Mangistau region. In 2020, the water main supplied 28.4 mln m³ of water. According to the 2020 data, the largest consumers are local population (54% of the total volume supplied) and oil and gas companies (39%). The volume of water supply to other industrial companies made up 6%, to agricultural producers – 0.7%, and 0.5% to state-financed organizations.

”The KazMunayGas Group maintains high standards of corporate, social and environmental responsibility, and is committed to ensure that its activities meet the sustainable development philosophy. We understand the importance of supplying water to western regions, thus we have started the project to reconstruct the Astrakhan – Mangyshlak water main. This will increase the water main capacity from 110 thous. m³/day to 170 thous. m³/day,” says Daniyar Berlibayev, Deputy Chairman of KMG’s Management Board.

“All parameters of the project are in line with the bank's mission, so EDB will consider applying all sorts of available instruments to support it. At the same time, the country is developing intensively: the population is increasing, industrialisation is continuing and the need for water is constantly rising. The Astrakhan - Mangyshlak water main reconstruction and expansion will make it possible to solve the emerging problem of water supply to the West Kazakhstan. EDB is ready to work for sustainable development and to be involved in other water-related projects,” stated Nikolay Podguzov, Chairman of EDB’s Management Board.

“KazMunayGas” Signs Trilateral Agreement for Integrated Gas Chemical Complex Construction Project

Fri, 04 Jun 2021 05:15:04 +0500

On 3 June 2021, NWF Samruk-Kazyna JSC (the Fund), JSC NC “KazMunayGas” (KMG) and PJSC SIBUR Holding (SIBUR) have signed the basic terms of cooperation for the integrated gas chemical complex construction project in Atyrau region (Phase 1 – polypropylene production, Phase 2 – polyethylene production). The event took place during the St. Petersburg International Economic Forum.

According to the document, the parties will consider the possibility of SIBUR's participation in the integrated gas chemical complex construction project. It is expected that the partners will make a decision on joint participation in the project following SIBUR's study of its economic efficiency by the end of 2021.

“In case of an affirmative resolution to enter the project, SIBUR will become a reliable partner we need to implement a complex, so important to our country. I would also like to note that this project will receive our comprehensive support. We will take all necessary measures for its successful realisation,” stated Alik Aidarbayev, Chairman of the KMG Management Board, during the meeting.

“SIBUR has unique experience in implementing large-scale investment projects in the petrochemical industry, and is interested in expanding the petrochemical part of the business, among other things, through entering new markets. In case of joint implementation of projects, we will be pleased to share with our partners the accumulated expertise in launching projects and operating world-class polymer complexes. The partners have extensive experience in the construction and operation of large facilities in the production, transportation and refining of oil and gas, and, in their turn, will be able to provide the projects with necessary raw material support and provide the business with the existing infrastructure within the special economic zone framework,” emphasized Dmitry Konov, Chairman of SIBUR’s Management Board.

We remind that KMG is currently implementing a project for the country's first gas chemical complex construction located in Atyrau region.

Currently, the progress status of of polypropylene production Phase 1 is 87%. The plant's capacity will be 500 thous. tonnes of polypropylene annually. The complex construction completion is expected this year; its commissioning is scheduled for Q1 2022.

As part of polyethylene production Phase 2, a feasibility study has been completed. The plant's capacity will be 1.25 mln. tonnes of large-scale polyethylene annually.

EBRD to Take Part in the TAZALYQ Environmental Project

Thu, 03 Jun 2021 20:07:00 +0500

Atyrau Refinery LLP (AR) and the European Bank for Reconstruction and Development (EBRD) have signed an Agreement to provide 80 mln U.S. dollars for financing the TAZALYQ project. The event took place in the framework of the “ECOJER” – “Form a Sustainable Future!” First International Congress held on 3 June in Nur-Sultan.

TAZALYQ involves the AR wastewater treatment units upgrade, as well as reclamation of 860 ha of evaporation fields.

In addition, a new, 3.5 km long wastewater pipeline construction from AR to the treatment units instead of the existing open discharge channel, is planned as part of the project. According to the project, wastewater generated by the plant will undergo two stages of treatment in new mechanical facilities and then in the existing biological treatment facilities. Some treated water will be reused at the refinery, and the rest will be directed to the Atyrau treatment facilities, under construction now. Therefore, this will also reduce freshwater intake from the Ural River.

Furthermore, a number of measures is foreseen to reduce greenhouse gas emissions and minimise the impact on the atmospheric air quality. The project is scheduled for implementation before 2023, and will create up to 150 jobs during the construction period.

JSC NC “KazMunayGas” provides guarantees in favour of EBRD to cover the AR’s obligations. The company notes that the project realisation will improve the environment in Atyrau, promote environmentally sound technologies and a green economy. It will have a beneficial impact on the health of city residents and minimise the impact of the Atyrau Refinery on the environment, flora and fauna of Atyrau region.

EBRD's involvement implies the highest requirements for the project, including those in terms of the environmental standards. Thus, the project must comply with EBRD’s Environmental and Social Policy, design solutions need to be developed with necessary evaluations and research, environmental and social management systems must be implemented, the best technologies available in the European Union must be adopted during the development of project solutions.

KMG Purchases New Buses for Oil Workers

Thu, 03 Jun 2021 11:15:58 +0500

JSC NC “KazMunayGas” (KMG) has purchased four 43-seat Hyundai Universe Luxury buses to transport the oil company workers to the fields. These buses are already on the books of Oil Transport Corporation LLP (OTC). In addition, another eight 21-seat buses are planned for purchase and delivery in Q3 and Q4 this year. As noted by KMG, the purchase of these buses is aimed to improve working conditions for oil workers.

The purchase of new vehicles is also linked to the need for the OTC bus fleet renewal. One of the conditions of transportation for many customers is a service life of no more than 8 years. It should be noted that there are 111 buses of various brands and passenger capacities (from 12 to 46 passengers) in the OTC fleet for various transportation tasks. The purchase of buses was envisaged for 2020, however, due to the crisis caused by the COVID-19 pandemic, this decision was postponed.

The purpose of acquiring Hyundai Universe buses is due to the increased requirements for safety, reliability and comfort of passengers, the need to unify the OTC vehicle fleet, which, in turn, entails a maintenance costs reduction, including the supply of spare parts, availability of specialists (mechanics) for repair work for one mode of transport. In addition, an important factor is the availability of a large luggage compartment for the transportation of personal belongings of workers performing their duties on a rotational basis, as well as a spacious fuel tank, in view of the considerable distances to the fields and the absence of refuelling stations along the route.

OTC provides transportation services for rotational and intra-field transportation for KMG’s subsidiaries in Mangistau region. The length of the routes is 600-2000 km. Over the past 20 years, OTC has no record of fatalities and injuries resulting from traffic accidents involving buses, due to the availability of qualified personnel with more than 20 years of experience and good technical condition of vehicles.

JSC NC “KazMunayGas” (KMG) has purchased four
43-seat Hyundai Universe Luxury buses to transport the oil company workers to the fields. These buses are already on the books of Oil Transport Corporation LLP (OTC). In addition, another eight 21-seat buses are planned for purchase and delivery in Q3 and Q4 this year. As noted by KMG, the purchase of these buses is aimed to improve working conditions for oil workers.

Alik Aidarbayev, CEO of JSC NC "KazMunayGas", Received by Samruk-Kazyna SWF's Management Council Chairman

Wed, 02 Jun 2021 12:08:28 +0500

During the meeting, Nursultan Nazarbayev was advised on the the national company’s 2021 performance and its current operations.

– Last year was the year of challenges and hardships for every one of us. The pandemic took a heavy toll on the economy. Along with that, oil prices fell. Many companies hit stiff headwinds. Gradual recovery is underway now, - Yelbasy said.

А. Aidarbayev reported that, notwithstanding the impact of the recession, the company has preserved financial stability and is working on achieving “pre-pandemic” performance. Information on the implementation by KazMunayGas of major investment and infrastructure projects was also presented during the meeting.

A message from the Chairman of the Management Board

Fri, 28 May 2021 11:36:31 +0500

Dear colleagues!

Since the last year, our country, along with the rest of the world, has been in a state of unprecedented struggle against the coronavirus pandemic. COVID-19 and quarantine measures have shocked the global economy. All of this has become a kind of endurance test for all countries without exception. And I must say that Kazakhstan has met these challenges with dignity. The country's government is taking decisive and prompt measures to protect the health of citizens and support the national economy.

However, for now it is still too early to relax. The disease has not retreated yet. Today, we are making every effort possible and spending significant resources to protect employees from this infection since our employees were, are and will always be the greatest treasure of the national company. This is where the issue of vaccination comes to the forefront. As of now, vaccination is the only way that will enable us to defeat the pandemic. As the Head of State Kassym-Jomart Tokayev has repeatedly noted, vaccination has no alternatives.

The world already has some positive examples: the countries with more than half of the population vaccinated, for example, Israel and the UK, have seen a sharp decline in the incidence and mortality from coronavirus. On the other hand, in the countries where such vaccination coverage is not available yet, the new, more deadly strains and mutations of the virus are spreading. The only way to avoid this in our country is to achieve the collective immunity as soon as possible.

At this pivotal moment for the country, I would like to call on each of you to show your commitment and actively get vaccinated. For this, all the necessary conditions have been created by the state. Everyone can choose between Kazakhstani QazVac, Russian Sputnik-V or Chinese Hayat-Vax. You can be vaccinated directly in outpatient clinics at the place of residence, or at the production and administrative facilities of KazMunayGas.

To date, almost 8,000 of our colleagues have already been vaccinated. I myself and the rest of the national company management have also received the vaccine. I want to emphasize here that vaccinated employees have unrestricted access to the fields and offices without having to undergo PCR tests.

Once again, I ask all of you to demonstrate a civic stance and take care of your own safety, safety of your family, your colleagues and fellow citizens. The sooner we defeat the pandemic, the sooner we will return to normal life.

Together we will overcome any difficulties and will become even stronger!

Regards,

A. Aidarbayev

KazMunayGas Management Visits POCR

Tue, 25 May 2021 09:51:11 +0500

On 20 May 2021 delegation of JSC NC "KazMunayGas”, led by Daniyar Tiyessov, Deputy Chairman of Management Board for Oil Refining and Oil Chemistry, made a site visit to the Pavlodar Oil-Chemistry Refinery. During an extended meeting on the operating results of Q1 2021, reports of the Pavlodar employees were heard, and POCR's objectives for the current year established.

Besides, KMG's management inspected the operation of the new central engineering building, familiarized themselves with the computer simulator system in the training center, and took part in the planting of trees on the refinery's premises.

KMG ANNOUNCES CONSENT SOLICITATION (2025, 2027, 2030, 2047 AND 2048 NOTES)

Mon, 24 May 2021 06:50:27 +0500

24 May 2021

JSC NC “KAZMUNAYGAS” AND KazMunaiGaz FINANCE SUB B.V. ANNOUNCE CONSENT SOLICITATION IN RESPECT OF THE U.S.$500,000,000 4.750% Notes due 2025, U.S.$1,000,000,000 4.75% Notes due 2027, U.S.$1,250,000,000 5.375% Notes due 2030, U.S.$1,250,000,000 5.75% Notes due 2047 and U.S.$1,500,000,000 6.375% Notes due 2048, IN EACH CASE ISSUED BY JSC NC “KAZMUNAYGAS” UNDER THE GLOBAL MEDIUM TERM NOTE PROGRAMME OF JSC NC “KAZMUNAYGAS” AND KazMunaiGaz FINANCE SUB B.V.

JSC NC “KazMunayGas” (the “Issuer” or “KMG”) and KazMunaiGaz Finance Sub B.V. (“KMG Finance”) today announce their invitation to each holder (a “Noteholder”) of:

S.$500,000,000 4.750% Notes due 2025 (Reg S ISIN: XS1807299174; Rule 144A ISIN: US48667QAR65) (the “2025 Notes”) of which U.S.$500,000,000 remains outstanding;
S.$1,000,000,000 4.75% Notes due 2027 (Reg S ISIN: XS1595713782; Rule 144A ISIN: US48667QAN51) (the “2027 Notes”) of which U.S.$1,000,000,000 remains outstanding;
S.$1,250,000,000 5.375% Notes due 2030 (Reg S ISIN: XS1807300105; Rule 144A ISIN: US48667QAQ82) (the “2030 Notes”) of which U.S.$1,250,000,000 remains outstanding;
S.$1,250,000,000 5.75% Notes due 2047 (Reg S ISIN: XS1595714087; Rule 144A ISIN: US48667QAP00) (the “2047 Notes”) of which U.S.$1,250,000,000 remains outstanding; and
S.$1,500,000,000 6.375% Notes due 2048 (Reg S ISIN: XS1807299331; Rule 144A ISIN: US48667QAS49) (the “2048 Notes”) of which U.S.$1,500,000,000 remains outstanding,

(each, a “Series” and, together, the “Notes”),

to consent to certain proposed amendments (the “Proposed Amendments”) being sought (the “Solicitation”) to (i) the terms and conditions of the 2025 Notes, (ii) the terms and conditions of the 2027 Notes, (iii) the terms and conditions of the 2030 Notes, (iv) the terms and conditions of the 2047 Notes, (v) the terms and conditions of the 2048 Notes and (vi) the provisions of the trust deeds constituting the 2025 Notes, the 2027 Notes, the 2030 Notes, the 2047 Notes and the 2048 Notes, all as more fully described in the Memorandum (as defined below) (the “Proposal”).

The Solicitation is made on the terms and subject to the conditions set forth in the Consent Solicitation Memorandum dated 24 May 2021 (the “Memorandum”). Terms used in this announcement but not defined herein have the respective meanings given to them in the Memorandum.

In order to vote in respect of the Solicitation, Noteholders must submit Voting Instructions to the Tabulation Agent by the time specified in the relevant Notice of Meeting on 14 June 2021 (the “Voting Deadline”) or otherwise make arrangements to vote at the relevant Meeting to be held at the time specified in the relevant Notice of Meeting on 16 June 2021.

The Early Consent Fee is, in the case of each the 2025 Notes, the 2027 Notes, the 2030 Notes, the 2047 Notes and the 2048 Notes, a fixed fee to be split among all holders of the relevant Series who validly submit Voting Instructions that are received by the Tabulation Agent on or before 5:00 p.m. (Eastern Standard Time)/10:00 p.m. (London time) on 7 June 2021 (the “Early Consent Deadline”) in favour of the relevant Extraordinary Resolution (“Qualifying Noteholders”) pro rata according to their holdings of Qualifying Notes of the relevant Series. The below table sets out an indicative illustration of the Early Consent Fee that would be received by each Qualifying Noteholder per U.S.$1,000 in principal amount of Qualifying Notes assuming either (i) all Noteholders of each Series submit Voting Instructions in favour of the relevant Extraordinary Resolution by the Early Consent Deadline: or (ii) Noteholders holding two-thirds of the principal amount of the Notes of each Series (which principal amount would be sufficient to form a quorum at any Meeting) submit Voting Instructions in favour of the relevant Extraordinary Resolution by the Early Consent Deadline:

Early Consent Fee	2025 Notes	2027 Notes	2030 Notes	2047 Notes	2048 Notes
Aggregate fee to be shared by all Qualifying Noteholders	U.S.$2.4 million	U.S.$6.6 million	U.S.$10.9 million	U.S.$18.1 million	U.S.$21.8 million
Indicative Early Consent Fee if 100% of Noteholders consent¹	U.S.$4.80 per U.S.$1,000 in principal amount of 2025 Notes	U.S.$6.60 per U.S.$1,000 in principal amount of 2027 Notes	U.S.$8.72 per U.S.$1,000 in principal amount of 2030 Notes	U.S.$14.48 per U.S.$1,000 in principal amount of 2047 Notes	U.S.$14.53 per U.S.$1,000 in principal amount of 2048 Notes
Indicative Early Consent Fee if 66^2/3% of Noteholders consent¹	U.S.$7.20 per U.S.$1,000 in principal amount of 2025 Notes	U.S.$9.90 per U.S.$1,000 in principal amount of 2027 Notes	U.S.$13.08 per U.S.$1,000 in principal amount of 2030 Notes	U.S.$21.72 per U.S.$1,000 in principal amount of 2047 Notes	U.S.$21.80 per U.S.$1,000 in principal amount of 2048 Notes

1 These are illustrative figures only. The actual amount of any Early Consent Fee will vary depending on the total number of Voting Instructions received prior to the Early Consent Deadline in favour of the relevant Extraordinary Resolution in the event the relevant Extraordinary Resolution is passed and the Condition to the Proposal is satisfied or waived (at the sole discretion of the Issuer).

The Proposed Amendments

The approval of the respective holders of each of the 2025 Notes, the 2027 Notes, the 2030 Notes, the 2047 Notes and the 2048 Notes is being solicited to the Proposed Amendments in relation to the terms and conditions of such Notes and the trust deeds constituting such Notes (the “Trust Deeds”), by way of Extraordinary Resolutions.

The holders of the 2025 Notes, the 2027 Notes, the 2030 Notes, the 2047 Notes and the 2048 Notes are being requested to provide their consent to, and approve, the alignment of the terms and conditions of each Series of Notes (the “Conditions”) with the terms and conditions of the U.S.$750,000,000 3.500% Notes due 2033 (the “2020 Notes”), with the Proposed Amendments (if approved) to take effect on the Effective Date. In the event the Proposed Amendments become effective, the commercial provisions of the amended terms and conditions of each Series will be the same as the terms and conditions of the 2020 Notes (the “2020 Conditions”). In addition, the holders of the 2025 Notes, the 2027 Notes, the 2030 Notes, the 2047 Notes and the 2048 Notes are being requested to provide their consent to, and approve, the alignment of schedule 4 (Provisions for Meetings of Noteholders) to each Trust Deed with schedule 4 (Provisions for Meetings of Noteholders) to the 2020 Trust Deed.

Rationale for the Solicitation

Over the course of the last few years, KMG has pursued a successful strategy of aligning its covenant package with its core peers – national oil companies and other state-owned national oil companies and/or investment grade issuers around the world. KMG has undertaken a number of successful bond offerings and consent solicitations to achieve this. The most recent such exercise was KMG’s issue of 2020 Notes in October 2020, which was met with strong investor demand in the market.

This offering successfully established a covenant package that is commensurate with KMG’s status and strategic importance for the Republic of Kazakhstan.

KMG is now, pursuant to the Proposal, seeking to align the Conditions with the 2020 Conditions.

The alignment, if implemented, will provide KMG with the flexibility required to pursue its corporate development strategy and its role as the national oil company of the Republic of Kazakhstan. If the covenants in the Conditions were aligned to those in the 2020 Conditions they would, for example, permit KMG to undertake the potential actions with respect to its wholly-owned subsidiary KazTransGas JSC (“KTG”) as discussed further in the “Terms of the Solicitation – Rationale for the Proposal – Potential Transfer of KTG” section of the Memorandum, which are currently not permitted under the Conditions (although they are under the 2020 Conditions).

KMG has discussed the Proposed Amendments with the relevant rating agencies and following these discussions does not expect that the passing of the Extraordinary Resolutions would result in a change to its corporate ratings or ratings of the Notes. As of the date of this announcement, the Issuer is rated “Baa3 with a positive outlook” by Moody’s Investors Service Ltd. (“Moody’s”), “BB with a negative outlook” by Standard & Poor’s Credit Market Services Europe Limited (“S&P”) and “BBB-” with a stable outlook by Fitch Ratings Limited (“Fitch”). For a summary of certain changes introduced in the 2020 Conditions as compared to the Conditions, please see the “Summary of the Proposed Amendments – Comparison of Certain Differences between the Conditions and the 2020 Conditions” section of the Memorandum.

Condition to the Proposal

Unless waived by the Issuer (in its sole discretion), the implementation of the Proposal is conditional upon all five Extraordinary Resolutions that are the subject of the Proposal being duly passed at each relevant Meeting or Adjourned Meeting for the applicable Series (the “Condition to the Proposal”).

Unless the Condition to the Proposal is waived by the Issuer at its sole discretion, no Early Consent Fee shall be payable to any Noteholder to the extent any one or more Extraordinary Resolutions is not duly passed at the relevant Meeting or, as the case may be, Adjourned Meeting, notwithstanding that any other Extraordinary Resolution was duly passed at the relevant Meeting or, as the case may be, Adjourned Meeting.

Meetings and Announcement of Results

There will be Meetings of Noteholders to consider the Proposal to be held by teleconference on 16 June 2021 commencing at 10:00 a.m. (London time) with subsequent Meetings in respect of each other Series being held at 15 minute intervals thereafter.

In light of the ongoing developments and the UK Government guidelines in relation to COVID-19, the Issuer believes it to be inadvisable to hold the Meetings at a physical location. Therefore, in accordance with the provisions of the Trust Deeds further regulations regarding the holding of the Meetings will be prescribed providing that the Meetings (and any adjourned Meetings) will be held via teleconference or other electronic means (“Virtual Meeting”). Accordingly, the Meetings (and any adjourned Meetings) will not be convened at a physical location. In such circumstances, those Noteholders who have indicated to the Tabulation Agent as described below that they wish to attend any Meeting will be provided with further details about attending the relevant Virtual Meeting.

Attendance at any Virtual Meeting (and any adjourned Meeting) shall take place over a secure video-conference facility. An alternative telephone dial-in number shall also be available in order to access the Meetings (and any adjourned Meetings) should internet connections fail. Noteholders will attend “virtually” by dialling into a secure teleconference or video conference. Each Noteholder shall be deemed to have fully understood and consented to any process governing the Virtual Meetings and the Trustee shall not suffer any liability as a result of the Meeting being held virtually. Noteholders who have submitted and not withdrawn a valid Voting Instruction in respect of the relevant Meeting will be unaffected and will not be requested to take any further action.

Each person eligible and wishing to attend any Meeting (the “participant”) shall give notice in writing to the Tabulation Agent (using the details specified at the back of the relevant Notice of Meeting) no later than 48 hours before the time fixed for the relevant Meeting. Such notice shall specify the full name of the participant, the capacity in which they are attending and (if voting) the principal amount of Notes of the relevant Series they hold or represent and their e-mail contact details. If the participant will be voting at the relevant Meeting, the notice shall be accompanied by an electronic copy of a valid identification document (passport or driving license) and, if applicable, sufficient evidence of blocking the Notes he or she holds or represents. The Tabulation Agent before the time fixed for the relevant Meeting shall notify the chairman of the relevant Meeting of participants (including their e-mail contact details) who have given notices pursuant to this paragraph. The chairman (or the teller on the chairman’s behalf) will, not earlier than 2 hours before the time fixed for the relevant Meeting, send each participant, as notified by the Tabulation Agent in accordance with the preceding sentence, instructions on accessing the teleconference using the email contact details provided.

After the Meetings, the Issuer and/or KMG Finance shall announce the results of the Meetings.

Indicative Timetable for the Solicitation

This is an indicative timetable showing one possible outcome for the timing of the Solicitation, based on the dates set out in the Memorandum. This timetable is subject to change and dates may be extended or changed by the Issuer (or KMG Finance on behalf of the Issuer), in its discretion, in accordance with the terms and conditions set out in the Memorandum (including the Condition to the Proposal). Accordingly, the actual timetable may differ significantly from the timetable set forth below. In addition, the timetable may also differ if any Meeting is required to be adjourned.

Date and time (all times are New York City time, unless otherwise stated)	Event
24 May 2021...............................................	Launch Date
5:00 p.m., 7 June 2021.................................	Record Date
5:00 p.m., 7 June 2021.................................	Early Consent Deadline
14 June 2021 (in respect of each Series, by the time specified in the relevant Notice of Meeting)	Voting Deadline
16 June 2021...............................................	Meetings and Announcement of Results
On or about 18 June 2021............................	Settlement Date

General

The Issuer (or KMG Finance on the Issuer’s behalf) may, in its sole discretion, extend, re-open, amend or waive any condition of the Proposal or the Solicitation at any time (subject to applicable law and as provided in the Memorandum). Details of any such extension, re-opening, amendment, waiver, termination or withdrawal will be announced as provided in this announcement as soon as reasonably practicable after the relevant decision is made.

Noteholders are advised to check with any bank, securities broker or other intermediary through which they hold Notes when such intermediary needs to receive instructions from a Noteholder in order for that Noteholder to be able to participate in, or (in the limited circumstances in which revocation is permitted) revoke their instruction to participate in, the Proposal or the Solicitation before the deadlines specified in the Memorandum. The deadlines set by each Clearing System for the submission and withdrawal of Voting Instructions will also be earlier than the relevant deadlines specified in the Memorandum.

For further information on the Proposal and the Solicitation and terms and conditions on which the Proposal and the Solicitation are made, Noteholders should refer to the Memorandum. Questions and requests for assistance in connection with the (a) Proposal and the Solicitation may be directed to the Solicitation Agents; and (b) Proposal, and the Solicitation and the delivery of Voting Instructions may be directed to the Tabulation Agent, the contact details for all of which are below.

Unless stated otherwise, announcements in relation to the Proposal and the Solicitation will be found (i) by issue of a press release to a recognised news service, (ii) by delivery of notices to the Clearing Systems for communication to Direct Participants, (iii) through RNS, the news distribution service operated by the London Stock Exchange, (iv) by publication on the website of the Kazakhstan Stock Exchange (at www.kase.kz) and (v) by publication on the website of the Astana International Exchange (at www.aix.kz). The Issuer and KMG Finance may also make announcements in relation to the Proposal and the Solicitation on the relevant Reuters International Insider Screen. Copies of all such announcements, press releases and notices can also be obtained from the Tabulation Agent, the contact details for which are at the bottom of this announcement. Significant delays may be experienced where notices are delivered to the Clearing Systems and Noteholders are urged to contact the Tabulation Agent for the relevant announcements during the course of the Solicitation. In addition, Noteholders may contact the Solicitation Agents for information using the contact details which are at the bottom of this announcement. Noteholders are advised to read carefully the Memorandum for full details of and information on the procedures for participating in the Solicitation.

Copies of the Memorandum are available from the Tabulation Agent as set out below. Capitalised terms used in this announcement but not defined herein have the meaning given to them in the Memorandum.

This announcement is made by:

JSC NC “KazMunayGas”
8, Kunayev Street

Nur-Sultan 010000
Kazakhstan

KazMunaiGaz Finance Sub B.V.

Strawinskylaan 807

Tower A-8
1077 XX Amsterdam
The Netherlands

Questions and requests for assistance in connection with the Solicitation may be directed to any Solicitation Agent.

J.P. Morgan AG

Taunustor 1 (TaunusTurm)
60310 Frankfurt am Main
Germany

Attention: EMEA Liability Management Group

Email: em_europe_lm@jpmorgan.com

J.P. Morgan Securities plc

25 Bank Street

Canary Wharf

London E14 5JP

United Kingdom

Attention: EMEA Liability Management Group

Email: em_europe_lm@jpmorgan.com

UBS AG London Branch

5 Broadgate
London EC2M 2QS
United Kingdom

Attention: Liability Management Group

Telephone (US): (collect) +1 (203) 719-4210; (toll free) +1 (888) 719-4210

Telephone (UK): +44 20 7568 1121

Email: ol-liabilitymanagement-eu@ubs.com

Questions and requests for assistance in connection with the delivery of Voting Instructions may be directed to the Tabulation Agent.

Lucid Issuer Services Limited

Tankerton Works

12 Argyle Walk

London WC1H 8HA

United Kingdom

Attention: David Shilson
By telephone: +44 207 704 0880
By email: kmg@lucid‑is.com

DISCLAIMER

This announcement must be read in conjunction with the Memorandum. This announcement and the Memorandum contain important information which should be read carefully before any decision is made with respect to the Solicitation. If you are in any doubt as to the contents of this announcement or the Memorandum or the action you should take, you are recommended to seek your own financial and legal advice, including in respect of any tax consequences, immediately from your stockbroker, bank manager, legal adviser, accountant or other independent financial adviser. Any individual or company whose Notes are held on its behalf by a broker, dealer, bank, custodian, trust company or other nominee or intermediary must contact such entity if it wishes to consent to the Proposal in respect of such Notes. For the avoidance of doubt, none of the Solicitation Agents, the Tabulation Agent, the Trustee, the Issuer or KMG Finance makes any recommendation as to whether Noteholders should participate in the Solicitation or otherwise provides any legal, business, tax or other advice in connection with the Solicitation.

This announcement is for informational purposes only. The Solicitation is being made only pursuant to the Memorandum and only in such jurisdictions as are permitted under applicable law. None of this announcement, the Memorandum nor any other documents or materials relating to the Solicitation constitutes an invitation to participate in the Solicitation in or from any jurisdiction where the Solicitation is unlawful.

The Solicitation Agents, the Trustee and the Tabulation Agent (and their respective directors, employees or affiliates) make no representations or recommendations whatsoever regarding this announcement, the Memorandum or the Solicitation. The Tabulation Agent is the agent of the Issuer and KMG Finance and owes no duty to any Noteholder. None of the Issuer, KMG Finance, the Solicitation Agents, the Trustee or the Tabulation Agent or any of their respective directors, employees or affiliates makes any recommendation as to whether or not the Noteholders should participate in the Solicitation or refrain from taking any action in the Solicitation with respect to any of Notes, and none of them has authorised any person to make any such recommendation.

JSC NC KazMunayGas announces financial results for the first quarter of 2021

Thu, 20 May 2021 06:41:20 +0500

Joint-stock (JSC) National Company (NC) KazMunayGas (“KMG” or Company), Kazakhstan's national vertically integrated oil and gas company, published its interim condensed consolidated financial statements according to International Financial Reporting Standards (IFRS) 34 “Interim financial statements” for the three months ended March 31, 2021 with independent auditor’s report.

Key financial indicators for the first quarter of 2021[1]:

Revenue amounted to 1,433 bln tenge (USD 3,413 mln) in the first quarter of 2021, compared to 1,376 bln tenge (USD 3,513 mln) in the first quarter of 2020;
EBITDA was at 494 bln tenge (USD 1,176 mln), compared to 275 bln tenge (USD 702) in the first quarter of 2020;
The Company's net profit for the period amounted to 286 bln tenge (USD 681 mln) in the reporting period, compared to 70 bln tenge (USD 177 mln) in the first quarter of Net profit attributable to shareholders of the parent company amounted to 287 bln tenge (USD 683 mln);
FCF amounted to 35 bln tenge (USD 83 mln), compared to 26 bln tenge (USD 66 mln) in the first quarter of 2020;
The Company's net debt was at USD 6,123 mln as of 31 March 2021, having decreased by 0.6% from USD 6,162 mln at the end of 2020;
Total debt decreased by 0.4% to USD 9,655 mln as of 31 March 2021 compared to 31 December 2020.

	UoM	1Q 2021	1Q 2020	%
Dated Brent¹, average	$/bbl	61.12	50.10	22.0%
Exchange rate, average	KZT/USD	419.94	391.72	7.2%
Revenue	bln tenge	1,433	1,376	4.1%
Share in profit of JVs and associates, net	bln tenge	218	65	235.4%
Net profit	bln tenge	286	70	308.6%
Net profit attributable to shareholders of the Parent Company	bln tenge	287	86	233.7%
EBITDA²	bln tenge	494	275	79.6%
Adjusted EBITDA³	bln tenge	277	217	27.6%
FCF⁴	bln tenge	35	26	34.6%
CAPEX (accrual basis)	bln tenge	52	143	-63.6%
CAPEX (cash basis)	bln tenge	82	127	-35.4%
Net debt⁵	bln tenge	2 602	2 594⁷	0.3%
Total debt⁶	bln tenge	4 102	4 078⁷	0.6%
¹ Source: S&P Global Platts. ²EBITDA = Revenue plus Share in profit of JVs and associates, net, minus Cost of purchased oil, gas petroleum products and refining costs minus Production expenses minus General and administrative expenses minus Transportation and selling expenses minus Taxes other than income tax. ³ Adjusted EBITDA = Revenue plus Dividends JVs and associates, minus Cost of purchased oil, gas petroleum products and refining costs minus Production expenses minus General and administrative expenses minus Transportation and selling expenses minus Taxes other than income tax. ⁴Free Cash Flow = Net cash flow from operating activities minus Purchase of property, plant and equipment, intangible assets, investment property and exploration and evaluation assets plus Proceeds from the loan previously provided to Caspian Pipeline Consortium due to transfer of Kazakh pipeline assets to CPC-K. In 2020, CPC fully repaid the interest on the loan to KMG in the amount of 38 bln tenge. ⁵Net debt = Noncurrent borrowings plus Current borrowings minus Cash and cash equivalents minus Short-term bank deposits minus Long-term bank deposits. Guaranteed obligations are not included in the calculation. ⁶Total debt = Noncurrent borrowings plus Current borrowings. Guaranteed obligations are not included in the calculation. ⁷As of 31 December 2020.

Operating results for the first quarter of 2021:

Oil and gas condensate production amounted to 5,318 thous. tonnes compared to 5,929 thous. tonnes in the first quarter of 2020;
The volumes of oil and gas transportation amounted to 18,327 thous. tonnes of oil and 22,149 million m³ of gas, respectively, which is 1.0% and 21.8% lower than in the first quarter of 2020;
Hydrocarbons refining volumes at the Kazakh and Romanian refineries remained practically unchanged and amounted to 4,662 thous. tonnes.

	1Q 2021 (net to KMG)	1Q 2020 (net to KMG)	%
Oil production, thous. tonnes	5,318	5,929	-10.3%
Gas production, mln m³	2,058	2,260	-8.9%
Oil transportation, thous. tonnes	18,327	18,517	-1.0%
Gas transportation, mln m³	22,149	28,320	-21.8%
Oil refining, thous. tonnes	4,662	4,660	-0.04%

Operating results presented in accordance with KMG's ownership interest in joint ventures and associates and 100% of results for consolidated subsidiaries, unless specifically indicated otherwise.

For more information, please see the Trading Update for 1Q 2021: https://kmg.kz/eng/investoram/reporting-and-financial-result/

Financial Highlights for the first quarter of 2021

Revenue

Revenue amounted to 1,433 bln tenge (USD 3,413 mln) in the first quarter of 2021, up by 4.1% vs. the same period of 2020. The positive impact on revenue dynamics was mainly attributable to an increase in average Dated Brent oil price by 22.0% year-on-year, weakening of the average exchange rate of tenge vs. the US dollar by 7.2% and increase in trading volumes of KMG International N.V (KMGI). Revenue growth was restrained by the production restrictions at certain fields under the OPEC+ agreement and a decrease in the revenue of KazTransGas JSC (KTG) due to a decrease in the gas sale volumes for export and international transit, as well as the average price of gas sales.

Share in profit of joint ventures and associates

Share in the profit of joint ventures and associates increased from 65 bln tenge (USD 167 mln) in the first quarter of 2020 to 218 bln tenge (USD 518 mln) in the first quarter of 2021. The following companies mainly supported the growth: Tengizchevroil LLP (TCO) at 89 bln tenge (USD 213 mln), Asian Gas Pipeline LLP (AGP) at 56 bln tenge (USD 133 mln) and Beineu-Shymkent Gas Pipeline LLP (BSGP) at 20 bln tenge (USD 47 mln). According to the results of the first quarter of 2021, the accounting net loss was at Teniz Service LLP in the amount of 1 bln tenge (USD 2 mln), Ural Group Limited (UGL) in the amount of 2 bln tenge (USD 4 mln).

EBITDA

EBITDA in the first quarter of 2021 was 494 bln tenge (USD 1,176 mln), demonstrating growth compared to 275 bln tenge (USD 702 mln) in the first quarter of 2020 due to an increase of segmented EBITDA in Gas trading and transportation, Exploration and production of oil and gas, Refining and trading of crude oil and refined products and Corporate centre.

Adjusted EBITDA

Adjusted EBITDA, reflecting dividends received from joint ventures and associates, in the first quarter of 2021 amounted to 277 bln tenge (USD 659 million), showing an increase of 27.6% year-on-year.

Net profit

The Company’s net profit increased from 70 bln tenge (USD 177 mln) in the first quarter of 2020 to 286 bln (USD 681) in the first quarter of 2021 due to an increase in average oil price, increase in revenues and share in the profit of joint ventures and associates, as well as decline of production expenses, general and administrative expenses and the absence of significant impairment of exploration and evaluation assets.

Net profit for the period attributable to shareholders of the Parent Company amounted to 287 bln tenge (USD 683 mln).

Cost of purchased oil, gas, petroleum products and other materials

Cost of purchased oil, gas, petroleum products and other materials increased by 0.8% year-on-year to 747 bln tenge (USD 1,779 mln) in the reporting period due to due to higher average price and volumes of oil purchases and weakening of the average exchange rate of tenge vs. the US dollar. The cost of purchasing oil for resale increased by 39.8% to 569 bln tenge (USD 1,355 mln). This was partially offset by a decrease in the cost of purchased gas for resale and a decrease in the cost of oil for refining. The decrease in purchased gas for resale from 146 bln tenge (USD 373 mln) in the first quarter of 2020 to 27 bln tenge (USD 64 mln) in the first quarter of 2021 was due to a decrease in the price and volumes of gas purchases at KTG.

Other expenses

In the first quarter of 2021, production expenses decreased by 5.7% year-on-year to 164 bln tenge (USD 391 mln) due to the reduction of short-term lease costs by 56.3% to 7 bln tenge (USD 16 mln).

Transportation and distribution costs increased by 3.4% year-on-year to 123 bln tenge (USD 292 mln) due to higher loading, transportation and storage costs.

General and administrative expenses decreased by 15.8% year-on-year to 32 bln tenge (USD 75 mln) because of a decline in expenses for consulting services and reversal of impairment of VAT receivable.

Taxes other than income tax decreased by 2.1% year-on-year to 92 bln tenge (USD 218 mln) mainly due to a decrease in export customs duty.

In the first quarter of 2021, finance costs were at 68 bln tenge (USD 162 mln), up by 1.5% year-on-year due to higher expenses on lease agreements.

Capital expenditures

In the first quarter of 2021, capital expenditures (on an accrual basis, segment reporting) amounted to 52 bln tenge (USD 123 mln) compared to 143 bln tenge (USD 366 mln) in the first quarter of 2020. Capital expenditures on a cash basis amounted to 82 bln tenge (USD 194 mln) with a decrease by 35.4% year-on-year. Capital expenditures decreased at Atyrau Refinery due to payment of arrears in the first quarter of 2020, at KMGI due to scheduled overhaul, at Ozenmunaigas due to lower volume of fixed assets purchase, at KMG Karachaganak LLP due to the smaller work volume on investment projects.

Debt management

Debt indicators

	UoM	31 March 2021	31 December 2020	%
Bonds	bln tenge	3,031	2,978	1.8%
Loans	bln tenge	1,071	1,101	-2.7%
Total debt	bln tenge	4,102	4,078	0.6%
Guarantee obligations under the syndicated loan of Beineu-Shymkent Gas Pipeline LLP	bln tenge	214	227	-5.7%
Guarantee obligations under the syndicated loan of AstanaGas KMG JSC	bln tenge	1.9	1.9	0.0%
Total debt with guarantee obligations	bln tenge	4,318	4,308	0.2%

Numbers may not add up due to rounding.

Total debt was at 4,102 bln tenge as of 31 March 2021 increased in tenge terms by 0.6% compared to 31 December 2020 (4,078 bln tenge). Total debt in US dollar terms was at USD 9,655 mln as of 31 March 2021, slightly decreased by 0.4% compared to 31 December 2020 (USD 9,690 mln).

Total debt including guaranteed obligations[2] amounted to 4,318 bln tenge (USD 10,163 mln) as of 31 March 2020, increased by 0.2% in tenge terms (in the US dollar terms: decrease by 0.7%) vs. 31 December 2020.

KMG's net debt amounted to 2,602 bln tenge (USD 6,123 mln) as of 31 March 2020, 0.3% higher in tenge terms compared to 31 December 2020 (in the US dollar terms: decrease by 0.6%).

Cash and cash equivalents

Consolidated cash and cash equivalents including deposits

	UoM	31 March 2021	31 December 2020	%
Cash and cash equivalents	bln tenge	1,174	1,146	2.4%
Short-term deposits	bln tenge	271	282	-3.9%
Long-term deposits	bln tenge	56	57	-1.8%
Cash and cash equivalents including deposits	bln tenge	1,501	1,485	1.1%

Consolidated cash and cash equivalents including deposits increased by 1.1% to 1,501 bln tenge as of 31 March 2020 vs. 31 December 2020. Consolidated cash and cash equivalents in the US dollar terms slightly increased by 0.1% to USD 3,532 mln as of 31 March 2020 vs. USD 3,528 mln as of 31 December 2020.

The increase in cash and cash equivalents is mainly due to positive net cash flow from operating activities at 116 bln tenge (USD 277 mln), and effects of exchange rate changes on cash and cash equivalents at 7 bln tenge (USD 16 mln).

Key corporate events from the beginning of 2021:

On March 11, 2021, KMG and NWF Samruk-Kazyna JSC signed a trust management agreement for 100% of ordinary shares of KTG;
Starting from 30 March 2021, KMG Eurobonds for a total amount of USD 6.25 bln have been included in the official list of Astana International Exchange;
On 21April 2021, a meeting of KTG bondholders was held, as a result of which, by a decision of a qualified majority, consent was obtained to change the terms of the bond issue prospectus in accordance with the memorandum of consent dated 30 March 2021. The amount of remuneration to the holders of KTG bonds amounted to USD 3.5 mln;
On 30 April 2021, the international rating agency S&P Global Ratings affirmed KMG's credit rating at “BB” with a “negative” outlook.

[1] The amounts were converted to US dollars for user convenience at average exchange rates for respective periods (average USDKZT for the first quarter of 2021 and the first quarter of 2020 were at 419.94 and 391.72, respectively; USDKZT as of 31 March 2021 and 31 December 2020 were at 424.89 and 420.91, respectively).

[2] It includes nominal amounts of guaranteed obligations on a syndicated loan of Beineu-Shymkent Gas Pipeline (BSGP) in the amount of 214 bln tenge (USD 504 mln), guaranteed obligation on a loan of JSC “AstanaGas KMG” in the amount of 1.9 bln tenge (USD 4.4 mln).

Over 6,000 employees of the KMG Group vaccinated against COVID-19

Wed, 19 May 2021 09:50:18 +0500

Over 6,000 employees or some 10% of the total personnel of the KazMunayGas Group have been vaccinated against COVID-19. About 2,000 of them have already got two shots. The vaccination activities are part of the state mass vaccination campaign.

Vaccination points are arranged in the central offices of subsidiaries, dedicated points at fields and in medical centres at the places of residence. Employees may choose between Kazakhstan’s QazVac, Chinese Hayat-Vax or Russian Sputnik-V.

“Throughout the pandemic, the company have implemented all preventive activities and made its best efforts to ensure the epidemiological safety of employees. The mass vaccination campaign has started in April with all the conditions provided for vaccination. In addition, the employees, who have got two shots of the vaccine, have free access to the field without a PCR test,” noted Kairat Saktaganov, Director of Safety and Environment Department at JSC NC "KazMunayGas".

Working visit of Samruk-Kazyna’s management to the sites of KazMunayGas in Atyrau Region and Mangistau Region

Fri, 14 May 2021 09:48:13 +0500

During the working trip on 12 and 13 May 2021, Almassadam Satkaliyev, Chairman of the Management Board of Samruk-Kazyna JSC, visited the sites of JSC NC "KazMunayGas" in Atyrau Region and Mangistau Region.

On 12 May, a meeting was held with Makhambet Dosmukhambetov, Akim of Atyrau Region, to discuss implementation and development of oil & gas and energy investment projects, social and economic activities of KMG’s subsidiaries.

A site walk-through and a brief meeting were arranged on the construction site of the Integrated Gas and Chemical Complex. According to Alik Aidarbayev, Chairman of KMG’s Management Board, the current construction progress of the polypropylene plant is over 86%.

Foundation and concrete work, installation of underground utilities have already been completed; steel structures, process piping and equipment are currently being installed. The construction is expected to be completed by the end of this year, while commissioning is scheduled for Q1 2022. The plant will enable Kazakhstan to produce up to 500,000 tonnes of polypropylene annually.

The construction site visit also included presentation of the future digital finished product warehouse being built with the involvement of DHL, the leader of the logistics market, and progress reports on digitalization of the polypropylene plant.

The delegation checked out the readiness of the supporting infrastructure facilities: a water and effluent treatment unit by Karabatan Utility Solutions LLP, performance of a 310 MW steam and gas turbine power plant and a compressed air and nitrogen production unit by Air Liquid Karabatan TechGases LLP.

The Chairman of Samruk-Kazyna’s Management Board instructed KazMunayGas to keep building petrochemical plants in Kazakhstan.

Options for manufacturing new and export types of products were presented by Atyrau Refinery. As a result of staged upgrades, AR is now one of the high-tech facilities with the Nelson complexity index of 13. During inspection of the refinery, the delegation visited the construction site of new open mechanical treatment units (MTUs) with construction phase 1 expected to be completed in 2021. The TAZALYQ Project, which provides for construction of a closed channel for effluents treated to standard quality and reclamation of evaporation fields, will minimise adverse impact on the environment. The environmental effect from the new MTUs is the removal of 8000 sq. m of open petroleum product evaporation fields and recycling of 15% of treated wastewater for own production. Reclamation of the evaporation fields will prevent adverse impact on the atmosphere, groundwater, local flora and fauna.

On 13 May, a meeting was held with the management of Tengizchevroil LLP. The meeting included presentation of the progress of major investment projects to increase oil production.

The meeting with Embamunaigas JSC included discussions of production and social & economic activities, vaccination of personnel. The guests were also shown the company’s proprietary digital transformation developments. Innovative data collection and processing methods reduced costs and increased efficiency of investments. The Smart Field project was highly praised by CIS oil producers.

On 13 May in Aktau, a meeting was held with Serikbai Trumov, Akim of Mangistau Region. Implementation of production and investment plans was discussed with the management of Mangistaumunaygas JSC and subsidiaries.

Working meetings to discuss current activities were also held during the visits to Caspi Bitum JV LLP, Aktau Sea Trade Port, NMSC Kazmortransflot LLP and Kuryk Port LLP.

JSC NC KazMunayGas First Quarter of 2021 Trading Update

Wed, 12 May 2021 03:21:12 +0500

Joint-stock (JSC) National Company (NC) KazMunayGas
(“KMG” or “Company”), Kazakhstan's national vertically integrated oil and gas company, announces its operating results for the first quarter of 2021.

Highlights for first quarter of 2021:

Oil and gas condensate production amounted to 5,318 thous. tonnes compared to 5,929 thous. tonnes in the first quarter of 2020;
The volumes of oil and gas transportation amounted to 18,327 thous. tonnes of oil and 22,149 million m³ of gas, respectively, which is 1.0% and 21.8% lower than in the first quarter of 2020;
Hydrocarbons refining volumes at the Kazakh and Romanian refineries remained practically unchanged and amounted to 4,662 thous. tonnes.

	1Q 2021 (net to KMG)	1Q 2020 (net to KMG)	%
Oil production, thous. tonnes	5,318	5,929	-10.3%
Gas production, mln m³	2,058	2,260	-8.9%
Oil transportation, thous. tonnes	18,327	18,517	-1.0%
Gas transportation, mln m³	22,149	28,320	-21.8%
Oil refining, thous. tonnes	4,662	4,660	-0.04%

Operational results of first quarter of 2021

Operating results presented in accordance with KMG's ownership interest in joint ventures and associates and 100% of results for consolidated subsidiaries, unless specifically indicated otherwise.

Upstream

The volume of oil and gas condensate production by KMG in the first quarter of 2021 amounted to 5,318 thous. tonnes (438 kbopd), showing a decrease of 10.3% compared to the first quarter of 2020. The volume of production of associated and natural gas decreased by 8.9% to 2,058 million m³.

Oil and condensate production, thous. tonnes	1Q 2021 (net to KMG)	1Q 2020 (net to KMG)	%
OMG	1,299	1,397	-7.1%
MMG	712	790	-9.9%
EMG	595	701	-15.2%
Tengiz	1,331	1,535	-13.3%
Kashagan	305	365	-16.6%
Karachaganak	279	285	-1.8%
Others	798	856	-6.8%
Total	5,318	5,929	-10.3%

Oil production at Tengiz decreased by 13.3% compared to the first quarter of 2020, amounting to 1,331 thousand tons (117 kbopd), and gas production declined by 11.9%, amounting to 741 million m³. A significant impact on the decline in oil production was made by the obligations assumed to limit production under the OPEC + agreement.

Oil production at Kashagan decreased by 16.6% to 305 thous. tonnes of oil (27 kbopd), while gas production decreased by 15.5% and amounted to 185 million m³. The decrease in production compared to the same period of the previous year was due to the assumed obligations to limit production under the OPEC + agreement.

Production of liquid hydrocarbons at Karachaganak decreased by 1.8% and amounted to 279 thous. tonnes (24 kbopd). Gas production amounted to 533 million m³ and decreased by 0.8% compared to the first quarter of 2020. The decline in production was due to restrictions on the intake of gas sent for processing to the Orenburg Gas Processing Plant. On March 20, 2021, after the successful completion of all construction, installation and commissioning works, an act of readiness for commissioning of the Project to remove production restrictions on gas (FOG project) was signed, which will provide an additional increase in the production of liquid hydrocarbons. The launch of the project is scheduled for June 2021 after the completion of production tests.

Oil production at operating assets decreased by 9.1% to 3,403 thous. tonnes (271 kbopd) and gas production decreased by 9.6% to 599 million m³. The decrease in production volumes was mainly due to the assumed obligations to limit production under the OPEC + agreement, as well as a natural decline at production at mature fields.

Midstream

The volume of oil trunk pipelines and sea transportation in the first quarter of 2021 decreased by 1.0% to 18,327 thousand tonnes¹.

Oil transportation, thous. tonnes	1Q 2021 (100%)	1Q 2021 (net to KMG)	1Q 2020 (net to KMG)	%
KazTransOil	10,238	10,238	10,510	-2.6%
Kazakhstan-China Pipeline	4,089	2,045	1,850	10.5%
MunaiTas²	943	481	284	69.3%
Caspian Pipeline Consortium	14,779	3,067	3,514	-12,7%
Kazmortransflot	2,496	2,496	2,359	5.8%
Total	-	18,327	18,517	-1.0%
1 Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation. 2 Munaitas is an equity-consolidated joint venture and transportation volumes are quoted at a 51% ownership interest.

The volume of oil transportation through trunk pipelines decreased by 2.0% and amounted to 15,830 thous. tonnes. The decrease in oil delivery volumes was due to the fulfillment of obligations by shippers to limit oil production under the OPEC + agreement. In turn, the overall reduction was partially offset by the restoration of the level of oil supplies from JSC CNPC-Aktobemunaigas to the pre-January 2020 level, when there was a decrease in oil supplies due to a critical excess of organochlorine compounds in oil, and also offset by an increase in oil transportation to the Shymkent refinery (PKOP).

Compared to the same period, the total volume of oil marine transportation in the first quarter of 2021 increased by 5.8%, mainly due to the growth in volumes in the Black Sea.

The volume of gas transported through the main gas pipelines of KMG in the first quarter of 2021 decreased by 21.8% to 22,149 million m³. The decrease was due to the reduction in transit flows of Russian gas by PJSC Gazprom through the territory of the Republic of Kazakhstan due to the commissioning of new gas transportation facilities and diversification of gas transportation routes to Russia. Along with this, there was a decrease in gas exports to China, as well as a decrease in the export of Karachaganak gas to Russia.

Gas transportation, mln m³	1Q 2021 (100%)	1Q 2021 (net to KMG)	1Q 2020 (net to KMG)	%
Intergas Central Asia	14.038	14,038	20,531	-31.6%
Asia Gas Pipeline	10,865	5,433	5,178	4.9%
Beineu-Shymkent Gas Pipeline	3,819	1,910	1,813	5.3%
KazTransGas Aimak	769	769	798	-3.7%
Total	-	22,149	28,320	-21.8%

Trading

The volume of sales of KMG's own produced oil and gas condensate in the first quarter of 2021 decreased by 13.4% compared to the same period last year and amounted to 5,213 thous. tonnes, of which 64.8% was exported.

Supplies to the domestic market of own produced oil and gas condensate amounted to 1,836 thous. tonnes, including supplies of crude oil from operating assets (Ozenmunaigas, Embamunaigas, Kazakhturkmunai and Urikhtau Operating) in the amount of 996 thous. tonnes to the Atyrau and Pavlodar refineries for further oil refining and sale of oil products.

Sales of gas in the first quarter of 2021 slightly decreased by 1.7% compared to the first quarter of 2020 and amounted to 7,669 mln m³. The export of sales gas amounted to 1,707 mln m³, of which 93% was exported to China. Compared to the same period in 2020, there was a decrease in gas export volumes by 33.4%, due to the absence of an agreement by KazTransGas JSC for the supply of gas to Russia for 2021 and a decrease in exports to China, amid growing gas consumption in the domestic market.

Downstream

Hydrocarbon refining, thous. tonnes	1Q 2021 (net to KMG)	1Q 2020 (net to KMG)	%
Atyrau refinery	1,178	1,384	-14.9%
Pavlodar refinery	1,397	1,321	5.8%
Shymkent refinery¹	681	590	15.5%
Caspi Bitum	72	53	35.2%
Petromidia	1,265	1,240	2.0%
Vega	69	72	-4.4%
Total	4,662	4,660	0.04%
[1] Shymkent refinery processing volume is indicated at a share of 50%

For the first quarter of 2021, the total refining volume compared to the first quarter of 2020 remained practically unchanged and amounted to 4,662 thous. tonnes:

Refining volumes at Kazakh refineries decreased by 0.6% and amounted to 3,328 tonnes. At the same time, the volumes at Atyrau Refinery decreased by 14.9%, due to a series of deep drawdowns in electricity at the beginning of the year. While at the rest of Kazakh refineries there was an increase in refining volumes, among which the largest increase by 15.5% was observed at PKOP due to additional utilisation to compensate for interruptions at the Atyrau Refinery;
The volume of refining at the KMG International refineries (Petromidia, Vega) in Romania amounted to 1,334 tonnes, the growth was insignificant, only 1.6% higher than in the first quarter of 2020.

In the first quarter of 2021, the volume of oil product production at Kazakh and Romanian refineries increased by 1.5% and amounted to 4,294 thous. tonnes:

Kazakh refineries produced 2,998 tonnesof oil products, which is 1.5% more than last year. There was a stable recovery in demand for petroleum products to levels before the pandemic;
Plants of KMG International (Petromidia, Vega) produced 1,296 tonnesof oil products, which is 1.5% higher than in the first quarter of 2020.

NC KazMunayGas JSC published Annual Report for 2020

Fri, 30 Apr 2021 10:40:34 +0500

The Annual Report describes key performance, significant corporate events as well as consolidated business operating and financial results of NC KazMunayGas JSC Group for 2020.

The Annual Report is available at the following link: https://www.kmg.kz/uploads/reports/KMG_AR2020_ENG.pdf

KMG and Tatneft continue developing their cooperation

Thu, 29 Apr 2021 12:09:36 +0500

On 28 April 2021, JSC NC "KazMunayGas” (KMG) and PJSC Tatneft (Tatneft) signed a number of joint documents. The event was held in Kazan as a part of the Eurasian Economic Union Summit and was attended by Askar Mamin, Prime Minister of the Republic of Kazakhstan, Mikhail Mishustin, Prime Minister of the Russian Federation, Rustam Minnikhanov, President of the Republic of Tatarstan, Alik Aidarbayev, Chairman of the KMG Management Board and Nayil Maganov, General Director of Tatneft.

For the Butadiene project, the parties signed a roadmap for the project implementation and a framework agreement. According to the agreements, a project company will be organized and a pre-investment stage with project feasibility study will be implemented.

During the meeting an Agreement of Intent to implement projects for exploration and development of hydrocarbon fields in the Republic of Kazakhstan was also signed. Within the framework of the document, it is planned to carry out a set of measures to study and assess the possibilities of implementing geological exploration and oil and gas production projects in Kazakhstan, arrange scientific projects in the area, develop feasibility studies, design field development and construction, select and implement geological and technical activities and oil recovery increasing methods, etc. Moreover, the agreement will make it possible to consider joint opportunities in the area of alternative renewable energy, both in Kazakhstan and abroad.

“The documents we have signed today became a logical continuation of our fruitful cooperation with Tatneft. I am convinced that our acquired experience in prospecting and exploration, field development and petrochemicals will contribute to the effective work of the two companies, and our partnership will bring investments, technology and new workplaces to the oil and gas complex and economy of the country” - noted Alik Aidarbayev, CEO of KMG.

“Tatneft and KazMunayGas make their contributions to reinforcement of the Eurasian Economic Community, implementation of the EAEC Economic Integration Strategy. Our joint projects with Kazakhstan are actively developing. We are pleased to share our technology and competences in field development, including design, geological and technical modelling and well construction, with our colleagues. Tatneft is always open for a dialogue with partners” - emphasized Nayil Maganov, General Director of Tatneft.

As a reminder, on 5 April in Saran, Karaganda Region, an Agreement was signed by KMG and Tatneft for basic cooperation conditions under the Butadiene project. The butadiene rubber project in Atyrau Region is scheduled to be implemented by 2025. The capacity will be 186 thousand tonnes of butadiene rubbers and 170 thousand tonnes of isobutane. Finished products will be supplied to a tyre plant in Karaganda Region, and exported to Europe, Russia, China, Turkey, etc.

KMG Eurobonds have been included in the official list of Astana International Exchange

Wed, 07 Apr 2021 06:55:36 +0500

JSC NC KazMunayGas (hereinafter - KMG) informs that KMG Eurobonds for a total amount of USD 6.250 billion have been included in the official list of Astana International Exchange since March 30, 2021. KMG Eurobonds have been traded on AIX since March 31, 2021 under the ticker symbol (KMG) with settlements in US dollars.

These securities are listed and traded on the Kazakhstan and London stock exchanges.

ISIN of the Eurobonds issue	Issue amount, US Dollars	Interest (coupon) rate	Maturity date
ISIN XS1595713782 (RegS), US48667QAN51 (144A)	1 000 000 000	4,75%	April 19, 2027
ISIN XS1595714087 (RegS), US48667QAP00 (144A)	1 250 000 000	5,75%	April 19, 2047
ISIN XS1807299174 (RegS), US48667QAR65 (144A)	500 000 000	4,75%	April 24, 2025
ISIN XS1807300105 (RegS), US48667QAQ82 (144A)	1 250 000 000	5,375%	April 24, 2030
ISIN XS1807299331 (RegS), US48667QAS49 (144A)	1 500 000 000	6,375%	April 24, 2048
ISIN XS2242422397 (RegS), US48126PAA03 (144A)	750 000 000	3,5%	April 14, 2033

KMG and Tatneft signed an Agreement for basic cooperation conditions under the Butadiene project

Mon, 05 Apr 2021 06:58:27 +0500

On 5 April, in Saran, Karaganda Region, an Agreement was signed for basic cooperation conditions under the Butadiene project to be implemented by JSC NC “KazMunayGas” (KMG) and PJSC Tatneft (Tatneft). The Agreement was signed as part of the official cornerstone laying ceremony for the future tyre-manufacturing facility. The ceremony was attended by Askar Mamin, Prime Minister of the Republic of Kazakhstan, Rustam Minnikhanov, President of the Republic of Tatarstan, Alik Aidarbayev, Chairman of the KMG Management Board, Nayil Maganov, General Director of Tatneft.

The butadiene rubber project in Atyrau Region is scheduled to be implemented by 2025. The capacity will be 186 thousand tonnes of butadiene rubbers and 170 thousand tonnes of iso-butane. The facility will use butane of Tengizchevroil LLP as the feed. The finished products will be supplied to a tyre works in Karaganda Region, and exported to Europe, Russia, China, Turkey, etc.

Implementation of this initiative will help create about 2,000 jobs during construction and 400 jobs during operation of the facility.

“Tatneft is one of the key partners of National Company “KazMunayGas”. We are actively cooperating in various fields — from supplies of goods and equipment to management of oil recovery improvement in mature fields. And I am pleased to note that our joint efforts have started to bring fruit. Today, we have signed an agreement for basic cooperation conditions under the butadiene and rubber project. It is, without a doubt, another important step towards development of the national oil and gas sector, and yet another confirmation that our cooperation is unshakeable,” noted Mr. Aidarbayev.

“Our colleagues from KazMunayGas and Tatneft are long-time business partners. After a short COVID-caused break, the negotiations of joint projects are now active again. The new joint butadiene project is closely related to construction of a Tyre Complex in Saran. We will supply local feed for Kazakhstan’s tyre production and make our contribution to Eurasian Economical Partnership between our countries,” emphasised Mr. Maganov.

As a reminder, in July 2019, KMG and Tatneft signed a Memorandum of Understanding, which defined the expected areas of cooperation. In November 2019, the companies signed a Roadmap to introduce best practices of PJSC Tatneft in the oil and gas sector of the Republic of Kazakhstan. In November 2020, KMG and Tatneft signed an Action Plan to cooperate and study economic feasibility of the butadiene rubber project.

For reference:

Styrene-butadiene-styrene (SBS) is used to modify bitumen in production of adhesives, glues and rubbers.

Butadiene-styrene synthetic rubber (BSSR) is used to produce highly wear-resistant and frost-resistant tyres with high dynamic endurance.

A message from the Chairman of the Management Board

Mon, 05 Apr 2021 06:57:30 +0500

Dear colleagues,

We are working in a major oil company and carry out complex and potentially hazardous work in nearly every region of Kazakhstan. As we all know, 2020 was a tough year for the industry, but despite the challenges, we did not only ensure the stability of production processes, but also significantly improved our HSE performance.

For the first time since JSC NC "KazMunayGas" became a member of International Association of Oil & Gas Producers (IOGP), the lost time injury rate and number of motor vehicle crashes have become lower than the average IOGP figures. This was facilitated by the long-term purposeful efforts of all employees of the KMG Group, leadership and support of the Board of Directors, and the introduction of the best industry practices.

It is worth mentioning that for the first time in history of JSC NC "KazMunayGas", the year ended without any work-related fatal accidents.

In addition, I would like to thank each and every employee of our large team for their personal contribution to development of a safety culture at our production facilities.

At the same time, the last year had its share of incidents and accidents, that is why today we have one common goal: at the very least, to keep our performance at the current level, and continue improving it. I believe that in the future, thanks to our joint efforts, we will achieve the best HSE results.

In accordance with the approved Environmental Policy, KMG management and subsidiaries follow the policy of zero tolerance towards damage and loss due to environmental pollution.

We continue to follow the path of environmentally responsible business, develop the environmental management system, and continue our dialogues with all stakeholders. As a result, for the 4^th time in a row, KMG takes 1^st place in the Environmental Data Transparency Rating among Kazakhstan oil and gas companies based on an independent assessment by WWF Russia, National Rating Agency and Creon Group.

As you all know, 2021 saw adoption of a new Environmental Code of the Republic of Kazakhstan. The country has taken the course towards decarbonization and tightening environmental requirements, standards are being introduced to switch to the best available technology (BAT) and minimise environmental impact.

With this in mind, in order to increase attention to environmental safety, reduce environmental impact and take measures to meet the new requirements and fit with the global trends, I have decided to declare 2021 the Year of Ecology for the KMG Group.

Despite general decrease of the COVID pandemic spread, it still poses threat to human health and imposes certain restrictions to activities of companies, including ours. This is why, this year we all need to continue working together on implementing preventive measures and sanitary requirements. I would like to avail myself of this opportunity and call on all our employees to actively participate in the national vaccination campaign and get vaccinated against COVID as soon as it becomes possible.

Our employees are the highest value for JSC NC "KazMunayGas", thus our primary objective is to protect lives and health of all people working in KMG Group.

I encourage you to follow the simple health and safety rules so that, at the end of the day, each of us could return to their family safe and sound.

Chairman of the Management Board

JSC NC "KazMunayGas"

A. Aidarbayev

Geologist's Day in KazMunayGas

Mon, 05 Apr 2021 06:57:18 +0500

Alik Aidarbayev, Chairman of the Management Board, JSC NC "KazMunayGas", wished happy Geo-Scientist's Day to the company's employees and handed them letters of appreciation.

The Geo-Scientist's Day is celebrated in Kazakhstan annually on the first Sunday of April.

KazMunayGas is among the leading oil and gas companies of the republic; it is to fulfill a number of challenging tasks, including expansion of the resource base and cost-effective production of oil and gas. KMG's portfolio primarily comprises mature fields, which determines and relevance and importance of geological prospecting. ‘I am confident that the high professional level, competence and selfless labour of our geo-scientists will enable KazMunayGas to continue performing the tasks, given to the company’, A. Aidarbayev noted.

On a final note, he wished his colleagues sound health, well-being, inexhaustible energy and new discoveries.

KazMunayGas, Ministry of Ecology and Kazgeology to Work on Attracting Foreign Investments

Fri, 19 Mar 2021 08:23:06 +0500

A cooperation agreement was signed on 19 March 2021 between JSC NC "KazMunayGas", the Ministry of Ecology, Geology and Natural Resources of the Republic of Kazakhstan, and National Geological Exploration Company Kazgeology JSC.

The parties will work together to attract investments for performing exploration works in order to assess hydrocarbon reserves in underexplored sedimentary basins of Kazakhstan. The agreement will be instrumental in consolidating efforts and in defining areas for geological research and exploration. Foreign investments will be of help not only in increasing the exploration maturity of Kazakhstan's territory, but also in replenishing its mineral resource base.

It is noted that all conditions are currently in place for new research of the national subsoil reserves. In respect of hydrocarbons alone, Kazakhstan's geologists have identified 15 sedimentary basins with forecast resources of some 76 billion tons of reference fuel.

The Karachaganak Gas Debottlenecking Project has been completed

Fri, 19 Mar 2021 03:27:20 +0500

Karachaganak Petroleum Operating B.V. (KPO) has announced a successful completion of the Karachaganak Gas Debottlenecking (KGDBN) Project.

The ceremonial launch of KGDBN Project was attended by senior officials from the Western Kazakhstan Oblast Akimat lead by Akim Gali Iskaliyev, JSC NC KazMunaiGas lead by the Chairman of the Board Alik Aidarbayev, KPO General Director and Chief Executive Officer of SICIM, the Contractor Company.

Commenting on the event, Edwin Blom, KPO General Director, said: “We are delighted to announce this significant achievement which is in full alignment with the RoK President Kassym-Zhomart Tokayev’s vision for the development of Karachaganak field. The successful completion of the KDGBN Project represents a historical milestone in the continued development of the Karachaganak field. KGDBN Project has raised the industry benchmark by following high safety standards, cost effectiveness and early completion”.

“KGDBN Project will provide capacity to enable the delivery of the remaining expansion projects including the Fourth Injection Compressor Project, currently in execution phase, and the approved 5th Injection Compressor project. These important projects are aimed at extending the duration of the liquid production plateau at Karachaganak. They will bring a significant additional value and secure continued generation of revenues for the Republic of Kazakhstan and the Karachaganak Partners while providing resources for further investment projects on the field and maximizing local content during execution”, added Edwin Blom.

Alik Aidarbayev, Chairman of the Board of JSC NC KazMunaiGas said: “The Gas Debottlenecking project was initiated in late 2018 and was to be finished as late as in the 4th quarter of 2021. However, all works were completed ahead of schedule, notwithstanding the restrictions, related to the COVID-19 pandemic. Implementation of the project will enable additional growth in the hydrocarbon liquids cumulative production. The company is to take up even bigger challenges. For one, Karachaganak Future Growth Project, which is to create new jobs, will attract additional investment and new technology”.

As of today, KPO Partners have invested more than $27 billion into the development of the Karachaganak field including $8.2 billion spent for local goods and services. KGDBN Project’s local content share has reached 57 per cent.

Alik Aidarbayev – 2021 Declared as the Year of Ecology for “KazMunayGas” Group

Thu, 18 Mar 2021 05:14:36 +0500

On March 16, in the course of his working visit to the Mangistau Region, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG) Alik Aidarbayev took part in the meeting of the Region’s Head Serikbai Trumov with aksakals, and wished them happy Amal and Nowruz.

Alik Aidarbayev also held a meeting with the CEOs of the regional oil production and oilfield services subsidiaries, where reports on the 2020 performance results were heard.

“I would like to emphasize that last year, the SDEs were able to meet their obligations under the OPEC+ agreement without loss of base production. All operational programs were implemented in accordance with the safety requirements, without casualties or accidents. Moreover, the timely anti-crisis measures enabled us to avoid cutting back the operational personnel,” Alik Aidarbayev said.

He also talked about the operational objectives for 2021, such as digitalization of petroleum production, expanded research and analysis of the producing well stock, and others. A particular focus was made on the importance of ecological safety and protection of the environment. By the decision of the Chairman of the KMG Management Board, the year 2021 was declared the Year of Ecology for the KazMunayGas Group.

In Zhanaozen, the head of KMG Alik Aidarbayev visited the production facilities of JSC “Ozenmunaigas”, including West Tenge field and the central processing shop.

He also got acquainted with the work of Balakai rehabilitation centre for children with special needs, for which JSC “Ozenmunaigas” had provided special premises. The annual budget covering the centre’s administrative costs will be funded out of the voluntary monthly contributions by JSC “Ozenmunaigas” employees,, whose number now total over 9000. The project is also supported by Social Development Foundation “Samruk-Kazyna Trust“, which has purchased rehabilitation equipment worth 40 million KZT for the centre.

Minutes of Direct Negotiations Signed for Al-Farabi Project

Tue, 16 Mar 2021 05:17:41 +0500

A tripartite meeting was held on March 15 between the RoK’s Minister of Energy Nurlan Nogayev, Chairman of the Management Board of JSC NC "KazMunayGas” (KMG) Alik Aidarbayev, and President of PJSC “LUKOIL” (LUKOIL) Vagit Alekperov. Minutes of direct negotiations on granting of the hydrocarbon prospecting and production license in the framework of joint development of the Al-Farabi offshore site was signed at the meeting. The parties noted significant progress in the project development. The next stage will involve the signing of the subsoil use contract and completion of the KMG-LUKOIL joint venture creation with the following ownership proportions: KMG – 50.01%, LUKOIL – 49.99%.

KazMunayGas and LUKOIL are strategic partners, and have been implementing joint projects for many years. This new step in their cooperation once again confirms the strong and close relations between the parties. Both companies are interested in expanding the reserve base and in searching for new opportunities to explore and produce hydrocarbons in the region,” Alik Aidarbayev said at the meeting.

The parties also discussed the joint operations of KMG and LUKOIL under Khvalynskoye, Tsentralnaya, Zhenis and other projects. The partner expressed interest in Kalamkas Sea and Khazar projects, which proves the appeal of Kazakhstan’s sector of the Caspian Sea for hydrocarbon exploration.

KMG is actively working towards fulfilling the assignment of the President and Government of the Republic of Kazakhstan to ramp up the reserve base and carry out prospecting and exploration, inter alia, by way of joint projects with oil and gas majors.

JSC NC KazMunayGas announces 2020 FY financial results

Mon, 15 Mar 2021 05:18:48 +0500

Joint-stock (JSC) National Company (NC) KazMunayGas (“KMG” or Company), Kazakhstan's national vertically integrated oil and gas company, published its consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) for 2020 with an independent auditor's report.

Dauren Karabayev, Deputy Chairman for Economics and Finance:

«Year 2020 was a test for resilience, through which the Company went well. Significant impact on financial results came from such factors as decline in oil prices, production restrictions under the OPEC+ agreement, and the coronavirus pandemic. However, the promptly taken measures in response to the external challenges enabled the Company to achieve results better than we expected in early 2020. This time KMG was better prepared for the cyclical downturn in oil prices. In 2020, the Company managed to ensure a positive free cash flow, maintain its credit ratings, and avoid any breach of financial covenants or increase in debt».

Key financial indicators for 2020[1]:

Revenue amounted to 4,556 bln tenge (USD 11,019 mln) in 2020, compared to 6,859 bln tenge in 2019;
EBITDA was at 1,151 bln tenge (USD 2,785 mln), compared to 1,963 bln tenge in 2019;
The Company's net profit amounted to 172 bln tenge (USD 416 mln) in 2020, compared to 1,158 bln tenge in 2019. Net profit attributable to shareholders of the parent company for the period amounted to 273 bln tenge (USD 661 mln);
FCF amounted to 88 bln tenge (USD 213 mln), compared to 592 bln tenge in 2019;
The Company's net debt was at USD 6,162 mln as of 31 December 2020, having decreased by 0.2% from USD 6,171 mln at the end of 2019;
Total debt decreased by 3.4% to USD 9,690 mln as of 31 December 2020 compared to 31 December 2019.

	UoM	2020	2019	%
Dated Brent¹, average	$/bbl	41.84	64.21	-34.8%
Exchange rate, average	KZT/USD	413.46	382.87	8.0%
Revenue	bln tenge	4,556	6,859	-33.6%
Share in profit of JVs and associates, net	bln tenge	511	828	-38.3%
Net profit	bln tenge	172	1,158	-85.2%
Net profit attributable to shareholders of the Parent Company	bln tenge	273	1,197	-77.2%
EBITDA²	bln tenge	1,151	1,963	-41.3%
FCF³	bln tenge	88	592	-85.1%
Net debt⁴	bln tenge	2,594	2,361	9.9%
Total debt⁵	bln tenge	4,078	3,838	6.3%
¹ Source: S&P Global Platts. ²EBITDA = Revenue plus Share in profit of JVs and associates, net, minus Cost of purchased oil, gas petroleum products and refining costs minus Production expenses minus General and administrative expenses minus Transportation and selling expenses minus Taxes other than income tax. ³Free Cash Flow = Net cash flow from operating activities (excluding TCO prepayments, net) minus Purchase of property, plant and equipment, intangible assets, investment property and exploration and evaluation assets plus Proceeds from the loan previously provided to Caspian Pipeline Consortium. ⁴Net debt = Noncurrent borrowings plus Current borrowings minus Cash and cash equivalents minus Short-term bank deposits minus Long-term bank deposits. Guarantees issued are not included in the calculation. ⁵Total debt = Noncurrent borrowings plus Current borrowings. Guarantees issued are not included in the calculation.

Operating results for 2020:

Oil and condensate production decreased by 7.9% year-on-year to 21,752 thous.tonnes;
Oil and gas transportation segment showed a decrease of 6.3% and 16.3%, and amounted to 73,171 thous. tonnes of oil and 86,590 mln m³ of gas, respectively;
Refining volumes at Kazakh and Romanian refineries decreased by 12.2% to 18,077 thous. tonnes.

	2020 (net to KMG)	2019 (net to KMG)	%
Oil production, thous. tonnes	21,752	23,618	-7.9%
Gas production, mln m³	8,191	8,455	-3.1%
Oil transportation, thous. tonnes	73,171	78,066	-6.3%
Gas transportation, mln m³	86,590	103,494	-16.3%
Oil refining, thous. tonnes	18,077	20,589	-12.2%

Operating results presented in accordance with KMG's ownership interest in joint ventures and associates and 100% of results for consolidated subsidiaries, unless specifically indicated otherwise.

For more information, please see the Trading Update for 2020: http://ir.kmg.kz/

Financial Highlights for 2020

Revenue

Revenue amounted to 4,556 bln tenge (USD 11,019 mln) in 2020, down by 33.6% vs. 2019. The negative impact on revenue dynamics was mainly attributable to decrease in average Dated Brent oil price by 34.8% year-on-year, lower volumes of oil sales reflecting production restrictions at certain fields under the OPEC+ agreement, as well as lower volumes of oil trading and sales of petroleum products at KMG International (KMG I). A decrease in revenues was partially offset by the weakening of the average exchange rate of tenge vs. the US dollar by 8.0%.

Share in profit of joint ventures and associates

In 2020, share in the profit of joint ventures and associates decreased by 38.3% year-on-year to 511 bln tenge (USD 1,236 mln), mainly due to lower profits of Tengizchevroil LLP (TCO), JSC Mangistaumunaigas (MMG), and KMG Kashagan B.V (Kashagan). The share in the net profit of TCO and MMG in the reporting period decreased by 58.2% and 79.6% to 173 bln tenge (USD 420 mln) and 17 bln tenge (USD 41 mln), respectively, reflecting lower average oil prices and lower production volumes. The loss from a share in profit of Kashagan was at 7 bln tenge (USD 17 mln) in 2020 due to lower oil prices. Meanwhile, Kashagan’s free cash flow was positive at USD 463 mln. In 2020, Ural Group Limited, PetroKazakhstan Inc. and Valsera Holdings B.V. also incurred accounting net losses, amounting to 10 bln tenge (USD 25 mln), 9 bln tenge (USD 21 mln) and 6 bln tenge (USD 15 mln) attributable to KMG’s share, respectively.

Cost of purchased oil, gas, petroleum products and other materials

Cost of purchased oil, gas, petroleum products and other materials decreased by 41.8% year-on-year to 2,277 bln tenge (USD 5,507 mln) in the reporting period. The decrease is due to the lower cost of purchased oil for resale, cost of oil for refining, as well as a drop in oil prices. This was partially offset by the weakening of tenge vs. the US dollar. The cost of purchased oil for resale decreased by 46.4% year-on-year to 1,311 bln tenge (USD 3,171 mln). The cost of oil for refining declined by 50.9% year-on-year to 314 bln tenge (USD 758 mln).

Other expenses

In 2020, production expenses increased marginally year-on-year to 741 bln tenge (USD 1,792 mln).

General and administrative expenses decreased by 20.5% year-on-year to 170 bln tenge (USD 412 mln).

Taxes other than income tax slid by 40.7% year-on-year to 270 bln tenge (USD 652 mln) mainly due to a decrease in rent tax on crude oil export, export customs duty and mineral extraction tax following a fall in oil prices.

In 2020, finance costs were at 298 bln tenge (USD 720 mln), down by 6.3% year-on-year. The decrease is mainly attributable to the early fulfilment of obligations under the TCO crude oil prepayment agreement.

Impairment of assets

Amidst significant changes in market prices, weighed by concerns over the COVID-19 pandemic and its impact on the economy, assumptions on oil prices, projected refinery margins, production volumes, exchange rate and inflation were revised during impairment testing. In 2020, KMG recognized an impairment in the total amount of 244 bln tenge (USD 589 mln) in the consolidated statement of comprehensive income. This includes asset impairment of KMG I at 162 bln tenge (USD 393 mln), JSC Embamunaigas at 60 bln tenge (USD 146 mln), Sunkar, Barys and Berkut self-propelled barges at 10 bln tenge (USD 25 mln) and others at 11 bln tenge (USD 25 mln).

Net profit

In the reporting year, the Company’s net profit slid by 85.2% year-on-year and amounted to 172 bln tenge (USD 416 mln) due to a decrease in prices, a decrease in revenues and share in the profit of joint ventures and associates, as well as impairment of assets, which was partially offset by lower cost of purchased oil, gas, petroleum products and other materials, as well as taxes other than income tax.

Net profit for the year attributable to shareholders of the Parent Company amounted to 273 bln tenge (USD 661 mln).

Capital expenditures

In 2020, the Company’s capital expenditures (on accrual basis, segment reporting) amounted to 454 bln tenge (USD 1,098 mln), down by 10.1% compared to 2019. This mainly reflects a decrease in capital expenditures in the segment “Exploration and production of oil and gas” by 35% year-on-year to 168 bln tenge (USD 405 mln).

Total debt

Total debt was at 4,078 bln tenge (USD 9,690 mln) as of 31 December 2020, having increased in tenge terms by 6.3% compared to 31 December 2019 (in the US dollars terms: decrease by 3.4%). Total debt including guaranteed obligations[2] amounted to 4,308 bln tenge (USD 10,234 mln) as of 31 December 2020, having increased by 5.0% in tenge terms (in the US dollar terms: decrease by 4.5%) vs. 31 December 2019.

An increase in total debt by 241 bln tenge is mainly attributable to the impact of the foreign exchange rate on the US dollar-denominated bonds and loans. Meanwhile, total debt in the US dollar terms decreased by 3.4% to USD 9,690 mln on 31 December 2020 from USD 10,030 mln on 31 December 2019. In January 2020, Atyrau Refinery received a long-term loan in tenge from DBK in the amount of 46 bln tenge to refinance a foreign currency loan received from the Export-Import Bank of China, which was obtained to fund new oil refining facilities. In May 2020, KTG made early partial redemption of Eurobonds with the nominal amount of USD 43.68 mln (18 bln tenge), paying in cash USD 41 mln (17 bln tenge) at a discounted price. In October 2020, Company placed bonds for USD 750 mln (equivalent to 322 bln tenge) at a coupon interest rate of 3.5% per annum and due 2033 with simultaneous early full redemption of bonds due 2022 and 2023 with a nominal value of USD 906.6 mln (equivalent to 392 bln tenge).

Cash and cash equivalents

Consolidated cash and cash equivalents, including deposits increased marginally by 0.6% to 1,485 bln tenge (USD 3,528 mln) as of 31 December 2020 vs. 31 December 2019. The increase in cash and cash equivalents is mainly due to positive net cash flow from operating activities at 447 bln tenge (USD 1,080 mln), and effects of exchange rate changes on cash and cash equivalents at 85 bln tenge (USD 206 mln). Consolidated cash and cash equivalents in the US dollar terms slid by 8.6% to USD 3,528 mln at the end of 2020 from USD 3,859 mln at the end of 2019.

Net debt

As a result of the above, KMG's net debt amounted to 2,594 bln tenge (USD 6,162 mln) as of 31 December 2020, 9.9% higher in tenge terms compared to 31 December 2019 (in the US dollar terms: decrease by 0.2%).

Key corporate events from the beginning of 2020:

On 27 March 2020, S&P Global Ratings affirmed its "BB" rating and revised its outlook on KMG from “stable” to "negative" on the back of lower oil prices;
On 27 March 2020, Fitch affirmed its rating at the level “BBB-” with a stable outlook;
In May 2020, KTG made an early partial redemption of its guaranteed bonds due in 2027 for the nominal value of USD 43.68 mln;
In line with the decision of Samruk-Kazyna and the National Bank of Kazakhstan in May 2020, KMG paid dividends in a full amount of 82 bln tenge (USD 198 mln), including dividends to Samruk-Kazyna in the amount of 74 bln tenge (USD 178 mln) and the National Bank of Kazakhstan in the amount of 8 bln tenge (USD 19 mln);
In October 2020, Company issued eurobonds for USD 750 mln (equivalent to 322 bln tenge) at a coupon interest rate of 3.5% per annum and due 2033 with simultaneous early full redemption of bonds due 2022 and 2023 with a nominal value of USD 906.6 mln (equivalent to 392 bln tenge);
On 16 November 2020, KTG, VTB Bank and SO JSC VTB Bank (Kazakhstan) JSC signed a loan agreement in Russian rubles for the amount equivalent to USD 200 mln. The funds were used to refinance the loan liabilities, provided by ING Bank, Citibank N.A., Mitsubishi UFJ Financial Group, Inc., Societe Generale и Mizuho Bank Ltd. in 2018;
On 17 November 2020, KMG Drilling&Services LLP paid the full settlement amount of USD 90.4 mln (equivalent to 39 bln tenge at payment date) in relation to the arbitrage dispute with the Consortium of companies (Ersai Caspian Contractor LLP and Caspian Offshore and Marine Construction LLP);
On 28 January 2021, S&P Global Ratings affirmed KMG’s ratings at "BB" with a negative outlook.

[1] The amounts were converted to US dollars for user convenience at average exchange rates for respective periods (average USDKZT for 2020 and 2019 were at 413.46 and 382.87, respectively; year-end USDKZT as of 31 December 2020 and 31 December 2019 were at 420.91 and 382.59, respectively).

[2] It includes nominal amounts of guaranteed obligations on a syndicated loan of Beineu-Shymkent Gas Pipeline (BSGP) in the amount of 227 bln tenge (USD 540 mln), guaranteed obligation on a loan of JSC “AstanaGas KMG” in the amount of 1.9 bln tenge (USD 4.4 mln) and lease liabilities in the amount of 62 bln tenge (USD 148 mln).

KazMunayGas and Samruk-Kazyna signed share management agreement with respect to 100% of KazTransGas common shares

Mon, 15 Mar 2021 05:07:47 +0500

On 11 March 2021, JSC NC “KazMunayGas" (KMG) and the Sovereign Wealth Fund Samruk-Kazyna JSC (the Fund) entered into a share management agreement (SMA or the Agreement) with respect to 100% common shares of JSC “KazTransGas” (KTG).

The SMA will enable the Fund to be more actively involved in managing KTG to provide support on strategic issues related to its development like improving the gas pricing regulation in the domestic market, modernizing and expanding the gas pipeline system, and further gasification of the country’s regions.

According to the Agreement, KMG will retain full control over KTG and will remain its beneficiary owner. KMG will continue fully consolidating KTG under IFRS. The Agreement does not imply the sale or disposal of KTG shares, is in compliance with all covenants in Eurobonds and other international obligations of KMG and KTG, and does not require consent from their respective creditors. The SMA and its provisions are accommodative to the current international credit ratings of KMG and KTG.

Maintaining investment grade credit ratings for KMG and KTG and meeting the interests of their international investors, including the holders of KMG and KTG Eurobonds, are important strategic priorities for KMG.

Earlier in June 2020, the Fund’s Management Council publicly announced that its Chairman, First President of Kazakhstan Mr. Nursultan Nazarbayev, asked the Government of Kazakhstan, the Fund, KMG and KTG for studying the possibility of and then adopting a final decision with respect to subordinating KTG directly to under the Fund.

KMG's Statement on a Media Publication

Tue, 09 Mar 2021 11:54:08 +0500

In response to a media publication titled KMG met with not-a-French-style Refusal of a Date (link: https://orda.kz/kak-kazmunajgazu-otkazali-v-svidanii-ne-po-anglijski/) of 7 March 2021, JSC NC “KazMunayGas” would like to announce that the information provided in the material is unreliable. In particular, the information about the UK-based corporation BP using stern wordings, placing the blame of the Management Board of JSC NC “KazMunayGas” in its letter about withdrawal from negotiations on the development of Kalamkas-Offshore and Khazar projects, is clearly untrue.

Furthermore, the author's allegations concerning the investor referring in the letter to KMG's lack of initiative and noting that there is nobody to negotiate with, are false. As evidence, please find attached a copy of the letter from Andrew McAuslan, Head of BP's Business Development. Mr. McAuslan emphasized that this decision stemmed from the review of the company's strategy – BP is now determined to focus on renewable energy.

KazMunayGas and Air Liquide, France, agreed on supply of hydrogen and nitrogen for Atyrau Refinery

Tue, 02 Mar 2021 09:32:27 +0500

JSC NC “KazMunayGas” (KMG) and Air Liquide, France, have agreed on supply of process gases to Atyrau Refinery. The project will be implemented via a joint venture Air Liquide Munay Tech Gases LLP (ALMTG).

It is planned to produce up to 200 mln cubic meters of hydrogen and 50 mln cubic meters of nitrogen annually under a long-term contract.

The agreements also include transfer of digital technologies, energy saving practices, enhancing the operational reliability of equipment and efficiency of production. For these purposes, the hydrogen and nitrogen production plants will be connected to the Air Liquide Smart Innovative Centre in Brussels (Belgium). Total investments from Air Liquide amounted to 86 mln euro, of which 65 mln euro were invested in the project at Atyrau Refinery.

Let us recall that Air Liquide is the global leader in production of gases for the industry, healthcare and environmental protection. Technological innovations by Air Liquide are used to reduce energy consumption of industrial companies and decrease pollutant emissions, for rational use of natural resources and developing the future energy, such as hydrogen, biofuel and sunlight.

Air Liquide Munay Tech Gases LLP is a joint venture of KMG (25%) and Air Liquide (75%), which has been implementing the project of managing the plants supplying hydrogen and steam to Pavlodar Oil Chemistry Refinery since 2018.

Kazakhstan’s Satti drilling rig will be used for drilling wells in the Azerbaijan sector of the Caspian Sea

Sat, 27 Feb 2021 09:59:33 +0500

On 25 February 2021, in Dubai, JSC NC “KazMunayGas” (KMG) and the State Oil Company of the Azerbaijan Republic (SOCAR) agreed to jointly operate Satti, a jack-up self-elevating drilling rig (hereinafter, JUR), in the Azerbaijan sector of the Caspian Sea.

The joint venture agreement between KMG Drilling&Services LLP (a KMG subsidiary) and Caspian Drilling Company Ltd (a SOCAR subsidiary) provides for the drilling of 2 exploration wells and 1 optional well in the Shallow Water Absheron Peninsula structure in the Azerbaijan sector of the Caspian Sea using the JUR. Akhmetzhan Yessimov, Head of Samruk-Kazyna JSC, and Alik Aidarbayev, Chairman of the KMG Management Board, attended the signing ceremony.

Satti JUR is the first offshore drilling rig built in Kazakhstan. The JUR is designed for drilling in the Caspian Sea at a depth of up to 80 metres.

Let us recall that on 19 June 2019, the JUR was towed to Baku under the trust management contract between KMG Drilling&Services LLP and Caspian Drilling Company Ltd. The contract provides for modification of the drilling rig allowing to ensure safe and efficient drilling of exploration wells more than 6,000 metres deep. Modification of the JUR is currently being finished.

As noted by KMG, participation in such projects makes it possible to increase the competitiveness of Kazakhstan’s oil and gas sector and gain experience in offshore drilling.

JSC NC KazMunayGas 2020 Trading Update

Thu, 25 Feb 2021 10:16:11 +0500

Joint-stock (JSC) National Company (NC) KazMunayGas (“KMG” or “Company”), Kazakhstan's national vertically integrated oil and gas company, announces its operating results for 2020.

Alik Aidarbayev, CEO:

“2020 became a sever challenge for the whole world and the oil and gas industry in particular. The COVID-19 pandemic, and as a result, a drop in demand for energy resources and restrictions under the OPEC + agreement led to a decrease in key production indicators. In order to overcome the negative consequences of the pandemic for KMG, anti-crisis measures were developed and successfully implemented in a timely manner, which allowed the Company to significantly mitigate the impact of the crisis, while maintaining stability and potential for future development. Despite the epidemiological situation and the collapse in oil prices, the Company did not stop production activities in all streams to ensure the continuity of the production process.

While maintaining a focus on the health and safety of employees and their families, the Company has taken all necessary measures to minimize the spread of COVID-19. Moreover, despite the current challenges, we have made a significant step in our sustainable development, in confirmation of which the international rating agency Sustainalytics awarded the Company a high mark at the level of 69 points. It is also very encouraging that in 2020 no fatal accidents related to work were registered, this result was achieved for the first time in the history of the Company. In addition, the number of accidents has been significantly reduced, while the KMG injury rate for the first time is lower than the industry average indicators of the International Association of Oil & Gas Producers (IOGP).

Successful overcoming of hardships were achieved through well-coordinated teamwork and dedication of each employee to their work. I express my gratitude to all employees for their hard work, which allowed not only to pass the trials, but also creates prospects for the further development of the Company in the future.”

Highlights for 2020:

Oil and condensate production decreased by 7.9% year-on-year to 21,752 thous.tonnes;
Oil and gas transportation segment showed a decrease of 6.3% and 16.3%, and amounted to 73,172 thous. tonnes of oil and 86,590 mln m³ of gas, respectively;
Refining volumes at Kazakh and Romanian refineries decreased by 12.2% to 18,077 thous. tonnes.

	2020 (net to KMG)	2019 (net to KMG)	%
Oil production, thous. tonnes	21,752	23,618	-7.9%
Gas production, mln m³	8,191	8,455	-3.1%
Oil transportation, thous. tonnes	73,171	78,066	-6.3%
Gas transportation, mln m³	86,590	103,494	-16.3%
Oil refining, thous. tonnes	18,077	20,589	-12.2%

Operational results of 2020

Operating results presented in accordance with KMG's ownership interest in joint ventures and associates and 100% of results for consolidated subsidiaries, unless specifically indicated otherwise.

Upstream

In 2020, KMG’s oil and gas condensate production amounted to 21,752 thous. tonnes (445 kbopd), having decreased by 7.9% year-on-year. Natural and associated gas production decreased by 3.1% to 8,191 mln m³.

Oil and condensate production, thous. tonnes	2020 (net to KMG)	2019 (net to KMG)	%
OMG	5,347	5,586	-4.3%
MMG	2,977	3,204	-7.1%
EMG	2,601	2,900	-10.3%
Tengiz	5,292	5,958	-11.2%
Kashagan	1,253	1,169	7.2%
Karachaganak	1,094	1,015	7.8%
Others	3,189	3,786	-15.8%
Total	21,752	23,618	-7.9%

KMG’s share in oil production at Tengiz declined by 11.2% year-on-year to 5,292 thous. tonnes (115 kbopd), and gas production decreased by 9.5% to 2,950 mln m³. Obligations to restrict oil production under the OPEC+ agreement had a significant impact on the decline in oil production.

Oil production at Kashagan increased by 7.2% to 1,253 thous. tonnes (27 kbopd). Natural and associated gas production increased by 8.3% to 758 mln m³. Oil and gas production increased as a result of the conducted overhaul in 2019, which led to the higher operational efficiency of offshore and onshore facilities, as well as an increase the injection fund from 4 to 6 wells, installation of additional reboilers on oil processing lines. The planned potential oil production at 1,332 thous. tonnes was not achieved due to restrictions under the OPEC+ agreement. In 2020, the average gross daily production at Kashagan (100%) amounted to 328 kbopd.

Oil and condensate production at Karachaganak increased by 7.8% to 1,094 thous.tonnes (23 kbopd). Gas production amounted to 2,021 mln m³, up by 8.6% year-on-year. The growth of oil and gas production is associated with modernisation of the facilities of Karachaganak Processing Complex and gas-processing units after planned preventive maintenance in September-October 2019 as well as an increase in gas injection in the summer after the commissioning of new gas injection wells of the 5th trunk line.

Oil production at KMG-operated assets decreased by 8.8% year-on-year to 14,113 thous. tonnes (279 kbopd). Gas production decreased by 6.6% to 2,463 mln m³. The decrease in oil production volumes at KMG-operated assets was mainly attributable to obligations undertaken under OPEC+ agreement, as well as the natural decline in production levels at mature fields.

Hydrocarbon reserves

According to reserves report prepared in compliance with international PRMS standards by the international independent consulting firm DeGolyer & MacNaughton, KMG’s proved plus probable hydrocarbon reserves (2P) amounted to 635 mln tonnes of oil equivalent (4,895 mmboe) as of 31 December 2020. Compared to 2019, the level of 2P reserves decreased by 6.1%. The decline in indicators is mainly due to technological reasons (natural decline of production at mature fields), as well as macroeconomic (decline in the forecast oil price and exchange rate volatility).

Net reserves under PRMS as of 31 December 2020

Reserves, mmtoe	2020 (net to KMG)	2019 (net to KMG)	%
Proved (1P)	459	499	-8.0%
Proved plus Probable (2P)	635	676	-6.1%
Proved plus Probable plus Possible (3P)	757	790	-4.2%

Reserves, mmboe	2020 (net to KMG)	2019 (net to KMG)	%
Proved (1P)	3 550	3 860	-8.0%
Proved plus Probable (2P)	4 894	5 220	-6.1%
Proved plus Probable plus Possible (3P)	5 832	6 089	-4.1%

Midstream

In 2020, volumes of oil transportation through pipeline and sea decreased by 6.3% to 73,171 thous. tonnes¹.

Oil transportation, thous. tonnes	2020 (100%)	2020 (net to KMG)	2019 (net to KMG)	%
KazTransOil	42,298	42,298	44,463	-4.9%
Kazakhstan-China Pipeline	15,883	7,942	8,100	-2.0%
MunaiTas²	3,321	1,694	1,648	2.8%
Caspian Pipeline Consortium	59,027	12,248	13,126	-6.7%
Kazmortransflot	8,990	8,990	10,729	-16.2%
Total	-	73,171	78,066	-6.3%
1 Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation. 2 Munaitas is an equity-consolidated joint venture and transportation volumes are quoted at a 51% ownership interest.

The volume of oil transportation through the trunk pipelines decreased by 4.7% year-on-year to 64,181 thous. tonnes. The decrease is attributable to the limited oil supply from CNPC Aktobemunaigas JSC due to finding and crucial excess of organochlorine compounds in oil, the decrease in oil supply from oil companies operating the Kumkol group of fields, affected by the natural decline in oil production, and restrictions under OPEC+ agreement.

Offshore oil transportation decreased by 16.2% to 8,990 thous. tonnes, affected by lower volumes in the Mediterranean Sea as a result of delays in anticipation of loading, as well as adverse weather conditions.

Gas transportation through KMG’s gas pipelines decreased by 16.3% to 86,590 mln m³. The decline is mainly attributable to lower Central Asian gas transit volumes to China, lower transit volumes of Russian gas from PJSC Gazprom through the territory of Kazakhstan, a decrease in export supplies of Karachaganak gas to Russia, and lower export volumes of Tengiz gas due to a decline in its production.

Gas transportation, mln m³	2020 (100%)	2020 (net to KMG)	2019 (net to KMG)	%
Intergas Central Asia	57,753	57,753	72,961	-20.8%
Asia Gas Pipeline	39,776	19,888	22,935	-13.3%
Beineu-Shymkent Gas Pipeline	12,694	6,347	5,044	25.8%
KazTransGas Aimak	2,603	2,603	2,554	1.9%
Total	-	86,590	103,494	-16.3%

Trading

In 2020, the sales volume of KMG's own produced oil and gas condensate decreased by 7.6% year-on-year to 22,012 thous. tonnes, of which 68.9% was exported.

The domestic supply of own produced oil and gas condensate amounted to 6,851 thous. tonnes, including crude oil supplies from KMG-operated assets (OzenMunayGas, EmbaMunayGas, Kazakhturkmunay and Urikhtau Operating) in the amount of 3,517 thous. tonnes to Atyrau and Pavlodar refineries for further oil refining and sale of oil products.

Gas sales slightly decreased by 0.7% year-on-year to 22,663 mln m³. Exports of sales gas reached 7,852 mln m³, of which 89.3% was exported to China. Because of the pandemic in 2020, gas exports to China were below the planned volumes, however, actual export volumes unchanged compared to last year.

Downstream

In connection with the introduction of quarantine measures in all cities of Kazakhstan in 2020 the demand for the main types of oil products in Kazakhstan decreased, which had a corresponding impact on the production activities of Kazakhstani oil refineries. The volumes of oil refining and production of oil products were reduced to avoid overstocking, while the production process was not stopped, the utilization of refineries was balanced in line with the required volume of oil products production. Currently, the refineries continue their production activities.

Hydrocarbon refining, thous. tonnes	2020 (net to KMG)	2019 (net to KMG)	%
Atyrau refinery	5,016	5,388	-6.9%
Pavlodar refinery	5,004	5,290	-5.4%
Shymkent refinery¹	2,397	2,701	-11.3%
Caspi Bitum	433	443	-2.3%
Petromidia	4,864	6,331	-23.2%
Vega	364	436	-16.6%
Total	18,077	20,589	-12.2%
[1] Shymkent refinery processing volume is indicated at a share of 50%

In 2020, refining volume decreased by 12.2% and amounted to 18,077 thous. tonnes:

Refining volumes at Kazakh refineries declined by 7% to 12,849 thous. tonnes, which is mainly attributable to lower oil refining volumes at three major refineries in line with the level of consumption of petroleum products;
Refining at KMG International refineries (Petromidia, Vega) in Romania amounted to 5,228 thous. tonnes, down by 22.7% year-on-year. Decline is a result of a production shutdown at Petromidia refinery related to scheduled overhaul from 15 March to 1 May 2020 as well as a decrease in demand for petroleum products in the region.

In 2020, the production of oil products at Kazakh and Romanian refineries decreased by 12.5% to 16,817 thous. tonnes:

Production of oil products at Kazakh refineries amounted to 11,707 thous. tonnes, down by 7.1% year-on-year due to lower oil refining volumes, amidst the COVID-19 implications on oil products consumption;
Oil products production at KMG International refineries (Petromidia, Vega) amounted to 5,110 thous. tonnes, down by 22.7% year-on-year due to production shutdown at Petromidia refinery due to scheduled overhaul.

Ecology and industrial safety

KMG gives priority attention to measures to prevent the negative impact of its activities on the environment and health of personnel.

In 2020, KMG successfully passed the assessment of the international rating agency Sustainalytics at the level of 69 points out of 100, which reflects the Company's rather high indicators in the field of sustainable development. In terms of the components of the ESG rating, KMG received the following assessments: environmental component at 69, social - 70, corporate governance - 67.

In addition, KMG received an ESG risk rating of 34.5 points, which shows a high level of unmanageable ESG risk. The company fell into the fourth out of five risk categories. Analysts of Sustainalytics assessed KMG's ESG risk management as “strong”. At the same time, the initial exposure to risks is assessed as “high”. The high value of KMG's rating is mainly associated with industry risks that management cannot control.

In 2020, the reporting of the CDP (Carbon Disclosure Project) was expanded, for the first time data on water resources management were published on the CDP site as part of the 2019 water security questionnaire. Also for the second year in a row, KMG published a report on greenhouse gas emissions for 2019 as part of the CDP climate questionnaire, which included data on the volumes of direct and indirect greenhouse gas emissions, issues of greenhouse gas emissions management, main risks and opportunities. Full versions of reports are available at: http://ir.kmg.kz/

	UoM	2020	2019	%	IOGP¹
Associated petroleum gas flaring intensity	tons per 1,000 tons of raw hydrocarbon production	2.2	2.95	-25.4%	10.6
Lost time incident rate	1 mln people-hours	0.21	0.31	-32.3%	0.24
Fatality accident rate	100 mln people-hours	0.0	1.28	-	0.46
[1] Available IOGP (International Association of Oil & Gas Producers) 2019 average results. (https://www.iogp.org/).

KMG Internal Audit Service passed independent assessment

Thu, 18 Feb 2021 05:07:18 +0500

The results of the external assessment of JSC NC “KazMunayGas” Internal Audit Service by KPMG Tax & Advisory LLP fully meet international professional standards of internal audit and best international practices.

In addition, according to IA Capability Model for the Public Sector maturity assessment, IAS is on the “Optimizing” maturity level for the majority of aspects, which is level five out of five. This model defines the fundamentals of an effective internal audit and describes development trends according to the current level.

Recognising the high efficiency of KMG’s Internal Audit Service confirms that the Company has implemented an efficient internal control system, as well as a systemic and consistent approach to risk assessment, annual scheduling and individual audits.

An internal audit service generally makes it possible to reduce risks of breaches of law and internal regulations. An effective internal audit service helps not only detect breaches of law, but also prevent them. KMG’s Internal Audit Service is independent and reports to the Board of Directors.

In 2020, “KazMunayGas” spent 165 billion tenge to support local manufacturers

Fri, 12 Feb 2021 05:05:10 +0500

On 11 February 2021, Kassym-Jomart Tokayev, Head of the State, took part in the online Samruk Business Forum to support local manufacturers (hereinafter, the “Forum”). Also, Akhmetzhan Yessimov, Head of Samruk-Kazyna JSC, Timur Kulibayev, Chairman of Presidium of Atameken NCE, Alik Aidarbayev, Chairman of the Management Board of JSC NC “KazMunayGas” (hereinafter, “KMG”), representatives of Kazakhstan business community and others attended the Forum.

During the Forum, Oil Service Company LLP – a KMG Organisation – and EPSILON GROUP LLP signed an offtake contract for 494 million tenge. The document provides for the procurement of calcium chloride for Oil Service Company LLP’s production needs.

Supporting local manufacturers in the face of external challenges, such as pandemics and protectionism practices of foreign markets, is one of the strategic objectives of KMG. An offtake contract mechanism promotes the national economy and creates new import-substituting operations, not only preserving the existing jobs, but also creating new ones.

“We have developed an action plan with specific measures to support local manufacturers. Specifically, subsidiaries were given the task to maximise procurement from Kazakhstan manufacturers. Contracts for procurement of works and services included requirements for vendors to purchase locally produced goods. In addition, it was prohibited to purchase imported products in terms of goods stipulated in the Economy of Simple Things,” Alik Aidarbayev, Head of KMG, noted.

He also announced that in 2020, as part of the Samruk-Kazyna JSC new operations promotion programme, KMG entered into 40 offtake contracts and 2 memoranda with local manufacturers implementing import-substituting projects totalling 13.6 billion tenge. Measures taken by KMG to support Kazakh manufacturers preserved about 23 thousand jobs and created about 1,600 new ones.

“We can see that the Government and Samruk-Kazyna Fund actively work to create conditions for the sustainable development of Kazakhstan manufacturers. And we can see the result. We were included in the programme to create new operations, and we got the opportunity to enter into an offtake contract totalling about 500 million tenge,” Timur Umirzakov, Deputy General Director of EPSILON GROUP LLP, said.

KMG noted that the National Company pays great attention to supporting local manufacturers. Thus, in 2020 KMG executed 165 billion tenge worth of contracts with local manufacturers. Due to consistent work, the share of local content in the procured goods was 71%, and 86% for services and works.

KazMunayGas Performance in 2020

Thu, 21 Jan 2021 05:21:09 +0500

JSC NC “KazMunayGas” (KMG) took stock of its performance in 2020 at the extended meeting attended by Akhmetzhan Yessimov, Chairman of the Management Board, NWF Samruk-Kazyna JSC.

During the meeting it was noted that despite all the last year’s challenges, KMG Group retained stability, prevented stopping of production processes, ensured financial stability and continued implementation of priority projects.

“One of the last year’s key goals was to improve financial stability of the entire KazMunayGas group. I believe, we achieved this goal. We did not solicited external loans, did not borrow money from the state, and preserved the resources saved earlier. In the last year, the company generated a positive free cash flow, which allowed us not only to continue reducing the debt, but also to fulfil the obligations to the shareholders on paying the dividends for 2019, which were the largest in the entire history of KazMunayGas”, noted Alik Aidarbayev, Chairman of KMG’s Management Board.

The total of 86 billion tenge of dividends was paid for 2019. Taxes and other company payments for 2020 amounted to 1,2 trillion tenge.

The KMG Group’s debt taking into account the existing guarantees for 2020 was reduced by $472 million including early repayment. Also, debt reduction is observed at the level of joint ventures, by over $1.1 billion, over half of which is due to the fact that KMG Kashagan B.V. KMG Eurobonds were successfully refinanced for $907 million, which made it possible to resolve the issue of large lump sum debt repayments. The next large lump sum repayment is expected only in 2025. The company prevented lowering of credit ratings from Moody’s, Fitch and S&P.

The company made several achievements In the production area. Specifically, in December, two wells were put into pilot operation at Eastern Urikhtau field as part of phase one. In case of a full-scale implementation of the project, the expected production may reach 1,5 billion cubic meters of gas and 500 thousand tons of oil per year. Oil free-flowing was achieved at exploration block Bekturly East in Mangystau Region and at S. Nurzhanov field in Atyrau Region.

Positive changes were also observed in oil processing and petrochemistry. The last year saw improved indicators of the light oil products yield, the depth of processing at the three oil refineries increased on average to 84,8% (from 86,3% to 87,2% at POCR, from 75% to 77,2% at AR, from 84,8% to 90,1% at PKOP).

Significant progress was made in the construction of a gas and chemical complex in Atyrau Region, which in 2020 grew from 53% to 80%. And despite the quarantine and suspended transport communications, we ensured an uninterrupted performance of construction-and-assembly works at the site, delivery of cargo and materials from abroad.

An extensive work was done in the social sphere.

Thanks to the comprehensive work on preserving the social stability among labour collectives and improving social welfare of population in the regions of industrial presence, the KMG Group social welfare index grew from 72% in 2019 to 74% in 2020 according to the study by the Social Engagement and Communications Centre of Samruk-Kazyna JSC.

Despite the cost reductions, the work on improving the working conditions of employees at the production sites was continued. New accommodation facilities were commissioned at Karazhanbas and Asar fields, a rotational camp was built in Aktobe Region, employees of the Atyrau Refinery received the keys to 100 apartments.

An important achievement for KMG in the last year was the absence of work-related fatal accidents. The company has achieved it for the first time.

“In the long run, the issues of labour protection and industrial safety, management of greenhouse gas emissions and reduction of gas flaring, management of water resources, reclamation of lands and increasing the energy efficiency, management of production waste will remain the company’s priorities”, A. Aidarbayev, head of KMG, summed up.

In the current year, the company intends to focus its efforts on further optimization of expenses, attraction of investment into geological exploration, implementation of major projects and achievement of sustainable development goals.

Winter diesel fuel ALTAY-45 production launched in Kazakhstan

Fri, 15 Jan 2021 03:09:01 +0500

The Atyrau Refinery, a subsidiary of JSC NC "KazMunayGas", has produced the first batch of winter diesel fuel Altay-45 with a pour point of minus 45 °С.

The diesel fuel of brand DT-A-K5 Altay-45 according to ST TOO 403 19154‑38-2020 has been produced at the diesel hydrotreating unit Prime D 3205 of the advanced oil refining complex. The new product meets the K5 class environmental requirements.

The minimal sulfur content and absence of additives improving low-temperature properties make this product compliant with the quality of arctic diesel fuel. It is of note that the Atyrau Refinery has become the first domestic enterprise to release the fuel with a record low pour point.

The first batch of new diesel fuel was produced in small amounts to meet the needs of the domestic market. In the future, as the demand grows, the production of Altay‑45 diesel fuel will increase.

As a reminder, in 2019, Atyrau Refinery LLP started production of Khazar‑38 diesel fuel, which back at the time had the lowest pour point across Kazakhstan. Thus, the launched production of Altay-45 extended the plant’s line of freeze-resistant diesel products with low filtration temperatures.

The production of high-quality low-temperature types of diesel fuel became possible after new units had been launched under the three-stage Atyrau Refinery upgrade program.

New wells are brought into pilot operation at the East Urikhtau field

Fri, 11 Dec 2020 03:19:31 +0500

On 11 December 2020, an official ceremony of bringing two wells into pilot operation at the East Urikhtau field took place in Aktobe Oblast. The ceremony was attended by Chairman of the Management Board of JSC NC “KazMunayGas” Alik Aidarbayev, First Deputy Akim of Aktobe Oblast Nurzhaugan Kalauov, Deputy Chairman of the Management Board, Exploration and Production, of JSC NC “KazMunayGas” Zhakyp Marabayev, and General Director of Urikhtau Operating LLP Amangeldy Taspikhov. During the field inspection, the delegation members visited the camp, well VU-1 and the booster pump station.

Note that the Resolution of the Investment Committee of JSC NC "KazMunayGas" (KMG) approved the implementation of the first phase of the Urikhtau project in May 2020. As part of the implementation of this phase, bringing into operation of two wells at the East Urikhtau field and five wells at the Central Urikhtau field is planned for December 2021.

In case of successful completion of the first phase and favourable market conditions, potential implementation of the second phase will be considered, which implies the operation of 58 wells of the Urikhtau fields group as well as the construction of a number of production facilities.

“In case of a full-scale implementation of the project, the expected production may reach 1.5 bln cubic meters of gas and 500 thousand tonnes of oil annually. Given that the recoverable reserves of the field amount to around 12 mln tonnes of oil and over 40 bln cubic meters of gas, I am confident that Urikhtau will take its rightful place in the KazMunayGas assets portfolio”, CEO of KMG A. Aidarbayev, noted.

The Urikhtau fields group is located in Mugalzhar District of Aktobe Oblast and includes the Central Urikhtau, East Urikhtau and South Urikhtau fields.

KMG is a founder and the only member of Urikhtau Operating LLP.

Once again, KMG topped the 2020 Environmental Transparency Rating of Oil and Gas Companies of the Republic of Kazakhstan

Tue, 08 Dec 2020 04:36:42 +0500

A presentation on the results of the Eurasian Environmental Transparency Rating of Oil and Gas Companies was held on the online platform of TASS press centre on 4 December 2020. The rating included 18 Russian oil and gas companies with an oil and gas condensate production volume of over 2 MM tonnes, as well as 14 Kazakh enterprises (starting from 0.5 MM tonnes per annum), two companies from Azerbaijan (starting from 0.1 MM tonnes per annum). The independent experts of WWF Russia, the National Rating Agency and Creon Group thoroughly examined the transparency of emergencies and oil spills, noting that the environmental transparency of the companies participating in the rating keeps growing.

For the fourth year in a row, KazMunayGas maintained leadership among the Kazakh companies, whereas North Caspian Operating ranked second and Karachaganak Petroleum Operating ranked third. BP company topped the list of Azerbaijani companies.

Over the seven years of the Russian rating’s existence, the first three places have been occupied by Sakhalin Energy, Surgutneftegas, Gazprom, Zarubezhneft and Exxon. At the end of the year, Zarubezhneft leads the rating, Surgutneftegas ranks second and Lukoil ranks third.

The rating methodology has been tested through corporate practices and for the second year in a row, an internal rating is held among the subsidiaries and dependent entities of JSC NC "KazMunayGas", which is topped by Intergas Central Asia JSC with Embamunaigas JSC and KazTransOil JSC coming in the leading trio.

“The burgeoning competition among the rating participants for the leading positions as well as the active dialogue between representatives of the oil and gas industry and the public irrefutably demonstrate the efficiency of the impact the project makes on enhancing the transparency of the entire industry, particularly, with respect to disclosing environmentally significant information,” says Viktor Chetverikov, Managing Director for NRA Development Projects.

KazMunayGas Annual Report 2019 Receives Several Awards

Mon, 30 Nov 2020 06:20:13 +0500

JSC NC “KazMunayGas” Annual Report 2019 entered the world’s best reports rating.

KMG became the only Kazakhstan company to enter the Comprend analytics list. 350 out of 1000 contender companies made it into the final round, where KMG ranked 263 with a B rating.

KMG Annual Report includes information on the outcomes of financial, economic and production activities, corporate social responsibility and sustainable development. This year’s rating was held for the 24th time. In the course of assessment, the international group of experts reviewed such disclosures as communication and style, operating activities and sustainable development, strategy and leadership, financial performance, investments and management. Comprend (until April 2020 – ReportWatch) is an international independent rating of annual reports, which was launched in 1996. The rating objective is to review the best practices in preparing annual reports for the sake of raising international financial and corporate reporting standards, bettering corporate communications and investor relations.

Furthermore, the KMG Annual Report was nominated as “The best annual report of a foreign company” in the annual competition of annual reports held by Moscow Exchange PJSC. This is the most reputable award in Russia in the field of corporate reporting. The competition helps raise the transparency level of companies, boost the efficiency of disclosures to investors and clients as well as establish a higher corporate culture. 111 companies participated in the competition, of which only 14 entities were nominated: 4 main awards and 10 additional awards. The panel of judges consisted of the representatives of major investment funds, professional associations, public organisations and regulatory bodies, leading financial analysts, experts in corporate management and communications.

It should also be noted that the interactive version of the KMG Annual Report was honoured by the international ARC Awards (Annual Report Competition). ARC Awards has been hosted by MerComm Inc. annually since 1987, it is positioned as the world’s biggest annual report competition and a platform for introducing the highest standards in this industry.

“The awards received by KazMunayGas are, first of all, a recognition of the results of the company efforts aimed at improving communications with stakeholders, including interaction with the investment community, aspiring to meet the best practices of the global industry leaders and improve the transparency of the company activities. Second, this is a concerted team effort where each team member contributed to the company’s common cause. We are glad that international experts highly evaluated the results of our work. It’s yet another proof of our movement in the right direction,” Aigul Beknazarova, Director of Finance Department, stated.

Note that KMG reports have been winners and laureates of annual report competitions and ratings more than a few times. In particular, in December 2019, the KMG Annual Report and KMG Sustainability Report were recognised as the best in the annual report competition 2018 hosted by QRA rating agency and sponsored by Kazakhstan Stock Exchange JSC (KASE). Besides, KASE has awarded KMG with diplomas “For Aspiration for Transparency” in the latest two years.

KazMunayGas announces financial results for the nine month of 2020

Wed, 25 Nov 2020 05:20:09 +0500

Joint-stock National Company KazMunayGas (“KMG” or “Company”), Kazakhstan's vertically integrated oil and gas company, published its interim condensed consolidated financial statements for the nine months of 2020, prepared in accordance with IAS 34, Interim Financial Reporting with independent auditor’s report on review of interim financial information.

Dauren Karabayev, Deputy Chairman for Economics and Finance:

“Decline in oil prices, the COVID-19 pandemic, OPEC+ production curtailment led to lower financial indicators in the reporting period compared to the same period last year. However, financial results are better than we originally expected in early 2020. KMG achieved positive free cash flow for the nine months of 2020 despite negative external factors. This was mainly thanks to the Company’s anti-crisis strategy for 2020-2021, under which costs were reduced. KMG also continued implementation of measures to maintain financial stability. In October, we successfully placed a 12.5-year Eurobond issue totaling USD 750 mln. The net proceeds were used for the early redemption of Eurobonds originally due in 2022 and 2023".

Financial Highlights for the nine months of 2020[1]:

Revenue amounted to 3,334 bln tenge (USD 8,147 mln), down by 35.0% year-on-year;
EBITDA[2] decreased by 43.2% year-on-year to 851 bln tenge (USD 2,081 mln);
The Company's net profit decreased by 82.8% year-on-year to 136 bln tenge (USD 333 mln). Net profit for the period attributable to Equity holders of the Parent Company amounted to 223 bln tenge (USD 545 mln);
FCF[3] was positive at 146 bln tenge (USD 357 mln);
The Company's net debt[4] amounted to USD 6,217 mln as of 30 September 2020, having increased by 0.7% compared to USD 6,171 mln at the end of 2019;
Total debt was at USD 9,867 mln as of 30 September 2020, down by 1.6% compared to 31 December 2019.

	UoM	9M2020	9M2019	%
Dated Brent, average	$/bbl	41.06	64.59	-36.4%
Exchange rate, average	KZT/USD	409.23	381.52	7.3%
Revenue	bln tenge	3,334	5,128	-35.0%
Share in profit of JVs and associates	bln tenge	323	639	-49.4%
Net profit	bln tenge	136	794	-82.8%
Net profit/(loss) attributable to Equity holders of the Parent Company	bln tenge	223	832	-73.2%
EBITDA	bln tenge	851	1,498	-43.2%
FCF	bln tenge	146	349	-58.1%
Net Debt[5]	bln tenge	2,685	2,361[6]	13.7%
Gross debt	bln tenge	4,261	3,838³	11.0%

Operating results for the nine months of 2020[7]:

Oil and condensate production decreased by 6.6% year-on-year to 16,423 thous.tonnes;
Oil and gas transportation segment showed a decrease of 5.9% and 14.7%, and amounted to 55,225 thous. tonnes of oil and 63,448 mln m³ of gas, respectively;
Refining volumes at Kazakh and Romanian refineries decreased by 14.4% to 13,081 thous. tonnes.

	9М 2020	9М 2019	%
Oil production, thous. tonnes	16,423	17,593	-6.6%
Gas production, mln m³	6,173	6,227	-0.9%
Oil transportation, thous. tonnes	55,225	58,696	-5.9%
Gas transportation, mln m³	63,448	74,369	-14.7%
Oil refining, thous. tonnes	13,081	15,281	-14.4%

For more information, please see the Trading Update for the nine months of 2020: http://ir.kmg.kz/ru.

Financial Highlights for the nine months of 2020

Revenue and other income

Revenue for the nine months of 2020 amounted to 3,334 bln tenge (USD 8,147 mln), having decreased by 35.0% year-on-year. The negative impact on revenue dynamics was mainly attributable to a decrease in average Brent crude oil price of 36.4% year-on-year, lower volumes of oil trading and sales of petroleum products at KMG International (KMG I), which was slightly offset by weakening of the average exchange rate of tenge vs. the US dollar by 7.3%. Revenue from export sales of Kazakh gas decreased by 9.8% to 452 bln tenge (USD 1,104 mln), mainly due to a decrease in gas export volumes and selling prices for gas exports to China.

Earnings from shares in the profit of joint ventures and associates decreased by 49.4% year-on-year to 323 bln tenge (USD 790 mln), mainly attributable to lower earnings from shares in the profit of Tengizchevroil LLP (TCO), JSC Mangistaumunaigas (MMG), KazRosGas LLP (KazRosGas), KMG Kashagan B.V (Kashagan), and the Beineu-Shymkent Gas Pipeline (BSGP). The earnings from shares in the profit of TCO and MMG decreased by 65.4% and 81.3% year-on-year, amounting to 108 bln tenge (USD 264 mln) and 12 bln tenge (USD 30 mln), respectively, reflecting lower average oil prices, and lower production volumes. The earnings from share in Kashagan's loss amounted to 9 bln tenge (USD 23 mln) due to lower oil prices, higher depreciation and amortization expenses in cost of sales, higher selling expenses. This was partially offset by an increase in oil production. The earnings from shares in the profit of KazRosGas and BSGP decreased, reflecting a recognition of foreign exchange losses amidst the weakening of tenge vs. the US dollar.

Costs and other expenses

Cost of purchased oil, gas, petroleum products for further sale and the cost of refining crude oil in the reporting period decreased by 44.7% year-on-year to 1,623 bln tenge (USD 3,967 mln). The decrease was due to lower cost of purchased oil for resale, lower cost of oil for refining, and lower oil prices, which was partially offset by the weakening of tenge vs. the US dollar. The cost of purchased oil for resale decreased by 48.3% year-on-year to 955 bln tenge (USD 2,333 mln). The cost of oil for refining slid by 57.5% year-on-year to 217 bln tenge (USD 530 mln).

Production expenses in the nine months of 2020 increased marginally year-on-year to 545 bln tenge (USD 1,331 mln).

Taxes other than income tax decreased by 40.8% year-on-year to 204 bln tenge (USD 499 mln), mainly due to lower rent tax on crude oil export, export customs duty, and mineral extraction tax amidst a decrease in oil prices.

Finance costs for the nine months of 2020 amounted to 202 bln tenge (USD 494 mln), down by 17.7% year-on-year. The decrease was mainly attributable to lower interest on bank overdrafts and short-term loans, as well as the early fulfillment of obligations under the TCO crude oil prepayment agreement at the end of 2019.

Impairment of assets

Amidst significant changes in market prices in the nine months of 2020, weighted by concerns over the COVID-19 pandemic and its impact on the economy, assumptions on Brent crude oil price, forecasted refinery margins, exchange rate and inflation were revised during impairment testing. KMG recognized an impairment in the total amount of 227 bln tenge (USD 556 mln) in the interim consolidated statement of comprehensive income for the nine months of 2020. This includes asset impairment of KMG International at 159 bln tenge (USD 389 mln), JSC Embamunaigas at 60 bln tenge (USD 148 mln) and others at KZT 8 bln (USD 20 mln).

Net profit

In the reporting period, the Company's net profit decreased by 82.8% year-on-year to 136 bln tenge (USD 333 mln) due to a decrease in average oil price, a decrease in revenues, share in the profit of JVs and associates, and a recognition of asset impairment. This was partially offset by a decrease in cost of purchased oil, gas, petroleum products and taxes other than income tax.

Net income for the period attributable to the Equity holders of the Parent Company amounted to 223 bln tenge (USD 545 mln).

Debt

Total debt was at 4,261 bln tenge (USD 9,867 mln) as of 30 September 2020, up by 11.0% compared to 31 December 2019 (in the US dollar terms: a decrease of 1.6%). Total debt including guarantees[8] was at 4,511 bln tenge (USD 10,447 mln) as of 30 September 2020, up by 10.0% (in the US dollar terms: a decrease of 2.5%) from 31 December 2019.

The 423 bln tenge increase in gross debt reflects the impact of the foreign exchange rate on the US Dollar-denominated bonds and loans. Gross debt in the US dollar terms decreased by 1.6% to USD 9,867 mln as of 30 September 2020 from USD 10,030 mln at year-end 2019. In January 2020, Atyrau Refinery received a long-term loan in tenge from DBK in the amount of 46 bln tenge (equivalent of USD 113 mln) to refinance a foreign currency loan received from The Export-Import Bank of China, which was obtained to fund new oil refining facilities. In May 2020, KTG made early partial redemption of Eurobonds with the nominal amount of USD 43.68 mln (18 bln tenge), paying in cash USD 41 mln (17 bln tenge) at discounted price.

Consolidated cash and cash equivalents, including deposits were at 1,576 bln tenge (USD 3,650 mln), having increased by 6.7% from 31 December 2020. The increase in cash and cash equivalents was mainly due to positive net cash flow from operating activities at KZT 401 bln (USD 981 mln) and effects of exchange rate changes on cash and cash equivalents at KZT 101 bln (USD 247 mln). In dollar terms, consolidated cash and cash equivalents decreased by 5.4% to USD 3,650 mln from USD 3,859 mln on 31 December 2019.

As a result of the above, KMG's net debt amounted to 2,685 bln tenge as of 30 September 2020 (USD 6,217 mln), which is 13.7% higher compared to 31 December 2019 in tenge terms (in the US dollar terms: an increase of 0.7%).

Key corporate events from the beginning of 2020:

On 27 March 2020, S&P Global ratings affirmed its "BB" rating and revised its outlook on KMG from “stable” to "negative" on the back of lower oil prices;
On 27 March 2020, Fitch affirmed its rating at the level “BBB-” with a Stable Outlook;
In May 2020, KTG made an early partial redemption of its guaranteed bonds due in 2027 for the nominal value of USD 43.68 mln;
After announcing dividends for 2019 in May 2020 in accordance with the decision of Samruk-Kazyna and the National Bank of Kazakhstan, KMG paid dividends in a full amount of 82 bln tenge (USD 200 mln). This includes dividends to Samruk-Kazyna in the amount of 74 bln tenge (USD 181 mln), and dividends to the National Bank of Kazakhstan in the amount of 8 bln tenge (USD 19 mln);
In October, KMG successfully placed new 12.5-year USD 750 mln Eurobonds with the net proceeds were used to fund the early redemption of outstanding Eurobonds due 2022 and 2023 for the nominal amount of USD 906.6 mln;
On 16 November 2020, KTG, VTB Bank and SO JSC VTB Bank (Kazakhstan) JSC signed a loan agreement for the amount of USD 200 mln equivalent of Russian rubles. The funds will be used to refinance the liabilities provided by ING Bank, Citibank N.A., Mitsubishi UFJ Financial Group, Inc., Société Générale and Mizuho Bank Ltd. in 2018.

[1] The amounts were converted to the US dollars for user convenience at average exchange rates in corresponding periods (average rates for the nine months of 2020 and 2019 were at 409.23 and 381.52 USDKZT, respectively; exchange rates at the end of periods - as of 30 September 2020 and 31 December 2019 were at 431.82 and 382.59 USDKZT, respectively).

[2] The Company calculates EBITDA as “Revenue + Share in profit of JVs and associates, net – Cost of purchased oil, gas, petroleum products and other materials – Production expenses - G&A expenses – Transportation and selling expenses – Taxes other than income tax.

[3] The Company calculates FCF as “CFO - TCO prepayments, net – Capex (cash basis) + Proceeds from the loan previously provided to Caspian Pipeline Consortium”.

[4] The Company calculates Net debt as “Noncurrent borrowings + Current borrowings – Cash & cash equivalents – Short-term bank deposits – Long-term bank deposits”.

[5] Net Debt as of 30 September 2020 does not include guaranteed obligations on a syndicated loan of Beineu-Shymkent Gas Pipeline (BSGP) in the amount of 249 bln tenge (USD 576 mln), guaranteed obligation on a loan of JSC “AstanaGas KMG” in the amount of 1.9 bln tenge (USD 4.3 mln), lease liabilities in the amount of 52 bln tenge (USD 120 mln); and Net Debt as of 31 December 2019 does not include guaranteed obligations on a syndicated loan of BSGP in the amount of 262 bln tenge (USD 684 mln), guaranteed obligation on a loan of JSC “AstanaGas KMG” in the amount of 1.9 bln tenge (USD 4.9 mln) and lease liabilities in the amount of 47 bln tenge (USD 123 mln).

[6] As of 31 December 2019

[7] Production results are based on KMG’s operating share, particularly, production volumes in accordance with KMG's share in JVs and associated companies and 100% volumes in consolidated subsidiaries.

[8] The nominal value of guaranteed obligations.

KMG CEO has familiarized with production operations in Atyrau

Thu, 19 Nov 2020 03:28:14 +0500

On November 17, CEO of JSC NC “KazMunayGas” (hereinafter – KMG) Mr. Aidarbayev visited production facilities during a working trip to Atyrau.

Mr. Aidarbayev learnt about construction progress of petro-chemical complex. To date, the project has been completed 78.2%. KMG management inspected construction sites of water treatment and wastewater treatment units, compressed air and nitrogen production facilities. The operation of steam-gas turbine power plant was also checked.

“I would like to note measures taken by KPI LT to increase number of local and expat employees at the construction site during the quarantine period. However, some restrictions did not affect pace of works and equipment delivery terms. Therefore, it is necessary to speed up construction and installation works to allow timely implementation of commissioning, A. Aidarbayev said during the meeting.”

Later, he got informed about implementation of “Tazalyk” project ANPZ refinery. KMG CEO noted needs to reduce terms of implementation of the project and speed up the procurement process. In addition, he mentioned the situation that took place on the refinery on November 1. It should be recalled that waste water containing floating and organic substances was discharged into the channel of standard-treated water stream. At the meeting, it was noted that KMG management took the situation under control in a timely manner. The plant personnel was instructed to prevent such cases in the future.

At TCO HQ, Mr. Aidarbayev got acquainted with FGP-WPMP progress. TCO GD Mrs. Bonner shared about completion of three-year program related to sea lifts from abroad to Kazakhstan, which includes 408 module sea lifts.

“The completion of sea lift is a huge achievement. This project has shown significant opportunities for Kazakhstani companies in sea logistics and fabrication of modules. Despite current unpleasant situation on the market, pandemic and global scale of sea lifts, I am glad that we have justified trust between our partners and the Republic of Kazakhstan. We hope that our fruitful cooperation with the RoK Government, local executive bodies and business partners will continue in order to complete and maximize development of Tengiz project,” Mrs. Bonner reported.

Since FGP-WPMP execution, TCO has spent over $10.3B to purchase Kazakhstani goods, services and works. The share of Kazakhstani employees in the project is 91%. TCO also attracts local companies to provide engineering, logistics and production services. Over 2 350 Kazakhstani organizations have been previously selected to participate in the project, of which 630 companies have signed contracts.

KazMunayGas: Offenders in the Incident at Atyrau Refinery will be Punished

Fri, 06 Nov 2020 11:55:39 +0500

On 5 November, as part of a special visit of Daniyar Tiyessov, Deputy Chairman of the Management Board of JSC NC “KazMunayGas” (KMG) for Oil Refining and Oil Chemistry to Atyrau Refinery (AR), a meeting was held to review the incident at the bio-treatment facilities.

It was reported during the meeting that, at the moment, there were no recorded deviations from oil product maximum permissible concentrations. In addition, an environmental protection plan was amended in view of the reasons for the incident and the results of the inspection. The incident investigation commission would also take a decision regarding punishment for the parties at fault at AR based on the inspection findings.

“It was a serious incident for the city, and the refinery is responsible for it. We apologise to the citizens for the incident. The KMG management continuously monitors the situation. We have upgraded the facility but, unfortunately, are still upgrading the mindset of our employees with regard to personal responsibility for operation cycles. Moreover, these employees are also residents of the city, that is why the consequences of their actions directly affect the well-being of the entire Atyrau population. The refinery must improve the situation as soon as possible and take the appropriate measures to avoid re-occurrence in the future,” emphasised D. Tiyessov.

To recap, on 1 November 2020 at 16:00, a failure of power supply resulted in the shutdown of the sump sludge recirculation pump of the bio-treatment facility. It led to exceeded concentrations of suspended and organic matter (bio-sludge) at the sand filter outlet of the sump. At the time, the sand-filter unit was being repaired and the unit was temporarily isolated from the process. As a result, wastewater with the suspended and organic matter was discharged from the bio-treatment facilities to the standard treated wastewater channel.

On 1 November at 23:00, the operation of the bio-treatment facilities was restored. Float lines were additionally installed at the standard treated wastewater channel to prevent bio-sludge from further entering the evaporation field. At the moment, bio-sludge from the channel is pumped out by vacuum machines and transported back to the facility.

JSC NC KazMunayGas 9M 2020 Trading Update

Fri, 30 Oct 2020 03:52:15 +0500

Joint-stock (JSC) National Company (NC) KazMunayGas
(“KMG” or “Company”), Kazakhstan's national vertically integrated oil and gas company, announces its operating results for the nine months of 2020.

Highlights for the nine months of 2020:

Oil and condensate production decreased by 6.6% year-on-year to 16,423 thous.tonnes;
Oil and gas transportation segment showed a decrease of 5.9% and 14.7%, and amounted to 55,225 thous. tonnes of oil and 63,448 mln m³ of gas, respectively;
Refining volumes at Kazakh and Romanian refineries decreased by 14.4% to 13,081 thous. tonnes.

	9М 2020	9М 2019	%
Oil production, thous. tonnes	16,423	17,593	-6.6%
Gas production, mln m³	6,173	6,227	-0.9%
Oil transportation, thous. tonnes	55,225	58,696	-5.9%
Gas transportation, mln m³	63,448	74,369	-14.7%
Oil refining, thous. tonnes	13,081	15,281	-14.4%

Operational results the nine months of 2020[1]

Upstream

In the nine months of 2020, KMG’s oil and gas condensate production amounted to 16,423 thous. tonnes (449 kbopd), having decreased by 6.6% year-on-year. Natural and associated gas production decreased marginally by 0.9% to 6,173 mln m³.

Oil and condensate production, thous. tonnes	9М 2020	9М 2019	%
Tengiz (20%)	4,032	4,394	-8.2%
Kashagan (8.44%)	954	838	13.8%
Karachaganak (10%)	816	760	7.4%
OMG (100%)	4,027	4,177	-3.6%
MMG (50%)	2,229	2,395	-6.9%
EMG (100%)	1,967	2,165	-9.1%
Others	2,397	2,864	-16.3%
Total	16,423	17,593	-6.6%

Oil production at Tengiz, Kashagan, and Karachaganak decreased by 3.2% year-on-year to 5,803 thous. tonnes (168 kbopd). Meanwhile, natural and associated gas production amounted to 4,315 mln m³, having unchanged year-on-year.

KMG’s share in oil production at Tengiz declined by 8.2% year-on-year to 4,032 thous. tonnes (117 kbopd), and gas production decreased by 6.9% to 2,238 mln m³. Restrictions under the OPEC+ agreement had a significant impact on the decline in oil production.

Oil production at Kashagan increased by 13.8% to 954 thous. tonnes (28 kbopd). Natural and associated gas production increased by 14.6% to 576 mln m³. Oil and gas production increased as a result of the conducted overhaul in 2019, which led to the higher operational efficiency of offshore and onshore facilities, as well as an increase the injection fund from 4 to 6 wells, installation of additional reboilers on oil processing lines, and new wells commissioning. In the nine months of 2020, the average gross daily production at Kashagan (100%) amounted to 333 kbopd.

Oil and condensate production at Karachaganak increased by 7.4% to 816 thous.tonnes (23 kbopd). Gas production amounted to 1,501 mln m³, up by 7.9% year-on-year. The growth of oil and gas production is associated with modernisation of the facilities of Karachaganak Processing Complex (KPC) and gas-processing units (Unit 2 and Unit 3) after planned preventive maintenance in September-October 2019.

Oil production at KMG-operated assets decreased by 8.5% year-on-year to 10,620 thous. tonnes (281 kbopd). Gas production decreased by 3.7% to 1,858 mln m³. The decrease in oil production volumes at KMG-operated assets was mainly attributable to restrictions under the OPEC+ agreement, as well as the natural decline in production levels at JV Kazgermunai LLP and JSC PetroKazakhstan Inc of 29.6%, and 23.1% respectively.

Midstream

In the nine months of 2020, oil transportation decreased by 5.9% to 55,225 thous. tonnes[2].

Oil transportation, thous. tonnes	KMG’s share	100%	9М2020 vs 9М2019, %
KazTransOil (90%)[3]	31,742	31,742	-4.8%
Kazakhstan-China Pipeline (50%)	5,821	11,642	-4.2%
Munai Tas (51%)	1,199	2,351	-5.3%
Caspian Pipeline Consortium (20,75%)	9,253	44,595	-4.0%
Kazmortransflot (100%)	7,210	7,210	-13.9%
Total	55,225	-	-5.9%

The volume of oil transportation through the trunk pipelines decreased by 4.6% year-on-year to 48,015 thous. tonnes. The decrease is attributable to the limited oil supply from CNPC Aktobemunaigas JSC due to finding and crucial excess of organochlorine compounds in oil in January 2020, the decrease in oil supply from oil companies operating the Kumkol group of fields, affected by the natural decline in oil production, and restrictions under OPEC+ agreement.

Offshore oil transportation decreased by 13.9% to 7,210 thous. tonnes, affected by lower volumes in the Mediterranean Sea as a result of delays in anticipation of loading, as well as adverse weather conditions.

Gas transportation through KMG’s gas pipelines decreased by 14.7% to 63,448 mln m³. The decline is mainly attributable to lower Central Asian gas transit volumes to China, lower transit volumes of Russian gas from PJSC Gazprom through the territory of Kazakhstan, a decrease in export supplies of Karachaganak gas to Russia, and lower export volumes of Tengiz gas due to a decline in its production.

Gas transportation, mln m³	KMG’s share	100%	9М2020 vs 9М2019, %
Intergas Central Asia (100%)	42,626	42,626	-17.9%
Asia Gas Pipeline (50%)	14,469	28,938	-15.6%
Beineu-Shymkent Gas Pipeline (50%)	4,464	8,929	27.2%
KazTransGas Aimak (100%)	1,889	1,889	3.8%
Total	63,448	-	-14.7%

Trading

In the nine months of 2020, the sales volume of KMG's own produced oil and gas condensate decreased by 4.5% year-on-year to 17,011 thous. tonnes, of which 71% was exported.

The domestic supply of own produced oil and gas condensate amounted to 4,955 thous. tonnes, including crude oil supplies from KMG-operated assets (JSC OzenMunayGas, JSC EmbaMunayGas, and Kazakhturkmunay LLP) in the amount of 2,500 thous. tonnes to Atyrau and Pavlodar refineries for further oil refining and sale of oil products.

Gas sales slightly decreased by 1.5% year-on-year to 15,498 mln m³. Exports of sales gas reached 5,936 mln m³, of which 88% was exported to China under the agreement dated in October 2018 on the supply of natural gas to China in the amount of up to 10 bln m³. Because of the pandemic in the nine months of 2020, gas exports to China were below the planned volumes, however, actual export volumes unchanged compared to nine months of last year.

Downstream

In connection with the introduction of quarantine measures in almost all cities of Kazakhstan in nine months of 2020 the demand for the main types of oil products in Kazakhstan significantly decreased, which had a corresponding impact on the production activities of Kazakhstani oil refineries. The volumes of oil refining and production of oil products were reduced to avoid overstocking, while the production process was not stopped, the utilization of refineries was balanced in line with the required volume of oil products production. Currently, the refineries continue their production activities.

Hydrocarbon refining[4], thous. tonnes	9М 2020	9М 2019	%
Atyrau refinery (99.53%)	3,679	3,915	-6.0%
Pavlodar refinery (100%)	3,519	3,931	-10.5%
Shymkent refinery (49.72%)	1,767	2,023	-12.6%
Caspi Bitum (50%)	346	332	4.4%
Petromidia (54.63%)	3,504	4,756	-26.3%
Vega (54.63%)	265	325	-18.5%
Total	13,081	15,281	-14.4%

In nine months of 2020, refining volume decreased by 14.4% and amounted to 13,081 thous. tonnes:

Refining volumes at Kazakh refineries declined by 8.7% to 9,312 thous. tonnes, which is mainly attributable to lower oil refining volumes at three major refineries in line with the level of consumption of petroleum products;
Refining at KMG International refineries (Petromidia, Vega) amounted to 3,769 thous. tonnes, down by 25.8% year-on-year, as a result of a production shutdown at Petromidia refinery related to scheduled overhaul from 15 March to 1 May 2020.

In the nine months of 2020, the production of oil products at Kazakh and Romanian refineries decreased by 14.7% to 12,202 thous. tonnes:

Production of oil products at Kazakh refineries amounted to 8,510 thous. tonnes, down by 8.8% year-on-year due to lower oil refining volumes, amidst the COVID-19 implications on oil products consumption;
Oil products production at KMG International refineries (Petromidia, Vega) amounted to 3,692 thous. tonnes, down by 25.8% year-on-year due to production shutdown at Petromidia refinery due to scheduled overhaul.

[1] Throughout the text, operating results are based on the net to KMG’s operating share, unless specifically indicated otherwise.

[2] Oil transportation volume includes trunk pipeline and marine oil transportation. In addition oil transportation volume takes into account the transportation volume of each pipeline company, including the operating share of KMG. Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation.

[3] The operating share of KMG in the oil transportation volumes of KazTrasOil is 100%, with an actual ownership share of 90%.

[4] The following operating shares are used as KMG's operating share in hydrocarbon refining volumes: Atyrau refinery - 100%, Pavlodar refinery - 100%, PKOP - 50%, Caspi Bitum - 50%, Petromidia - 100%, Vega - 100%.The operating share of KMG in the oil transportation volumes of KazTrasOil is 100%, with an actual ownership share of 90%.

Desalination Plant in Karazhanbas to be Launched in Q1 2021

Thu, 29 Oct 2020 12:10:16 +0500

The desalination plant in Karazhanbas is scheduled for start-up in Q1 2021. The new produced water processing plant will have a capacity of 42,500 m³/day and will use the multi-stage filtration and reverse osmosis desalination technologies. Desalinated water production will amount to 17,000 m³/day. This was announced during the press tour organised by JSC NC "KazMunayGas" (KMG) and JSC “Karazhanbasmunai” (KBM) at the Karazhanbas field.

Today, KBM consumes 17,500 m³ of Volga water from the Astrakhan-Mangyshlak water conduit. When launched, the desalination plant will supply water to the field and make a large amount of water available for the needs of the people in the Mangistau Region. In addition, up to 50 new jobs are expected to be created upon completion of the construction. The new enterprise will also contribute to the solution of a range of KBM’s process issues. For one, from 2021 to 2035, KBM intends to increase oil production at the field by at least 700,000 tonnes, to lower the number of well workovers and subsurface repairs and to reduce cratering blow-out.

It should be noted that the start-up of the plant was rescheduled from December 2020 to Q1 2021 due to the COVID-19 pandemic which led to delays in the equipment supplies.

The participants of the press tour were also informed about KBM’s ecological projects and environmental protection activities.

KBM is now continuing with its efforts to clean up the historical oil contamination areas totalling 350 hectares, of which 143 hectares have already been cleaned up by KBM. The company has abandoned 11 wells drilled in the late 1970s in the Caspian coastal area and has disposed of 180,000 tonnes of waste at the temporary storage site.

Every year, KBM allocates considerable funds for environmental protection, including processing and disposal of waste and waste from the temporary storage site. Whereas in 2016 these expenses were 168 million tenges, the amount budgeted for the current year exceeds 479 million tenges.

As a reminder, in 2019, KMG and the Ministry of Ecology, Geology and Natural Resources of the Republic of Kazakhstan signed a Memorandum of Environmental Cooperation. Pursuant to this document, KMG’s subsidiaries, namely KBM, JSC “Mangistaumunaigas” and JSC “Ozenmunaigaz”, assumed the obligation to dispose of historical contaminations and to clean up the oil-contaminated lands within their contract territories as well as to dispose of and process the waste placed in unequipped sludge collectors.

SPE Caspian Technical Conference: KMG Focused on Continuous Improvement

Thu, 22 Oct 2020 12:09:03 +0500

The Caspian Technical Conference of the international Society of Petroleum Engineers (SPE) was held online during 21–22 October. The event was organised with the support of JSC NC "KazMunayGas" (KMG).

The Conference Topic is “Competing on a global scale: Creating the right environment”. The Conference was attended by representatives of oil and gas companies, international organisations, the Ministry of Energy and the Ministry of Ecology, Geology and Natural Resources of the Republic of Kazakhstan, KAZENERGY Association.

“Forums like SPE are very important. We need to jointly discuss matters relevant to our industry in this fast-changing world. One of our key objectives is to promote direct contacts among technical experts in the oil and gas sector, which, eventually, determine how efficiently the current targets of the industry will be achieved,” Zhakyp Marabayev, KMG’s Chief Exploration and Production Officer, said at the opening ceremony.

The conference included a panel discussion for investors and operators, more than 12 technical sessions, where experts discussed the existing challenges, the social, economic and educational needs of the oil and gas sector, the trends and achievements of the industry.

“The principal challenges we face are rooted in the fact that many fields are already quite mature. The physical wear of equipment and the lack of historical data to enable us to make the right decisions and to influence the effectiveness of our operations are among the most critical challenges. Just like other operators, we aim at maintaining the continuous improvement cycle for our assets. We pay more and more attention to raising the technical quality of our solutions and optimising our operations. Competent staff, application of best practices, identification and prompt implementation of the new technology are the factors that will contribute to this objective,” Zhakyp Marabayev said at the panel session “Driving economic success in today’s operational landscape”.

Kairat Saktaganov, KMG’s HSE Director, told about the company’s preparedness for emergencies. Development of HR potential in the oil and gas sector was discussed by KMG’s Director of Human Resources Botagoz Ashirbekova at the panel session “Hiring to win: Education, recruiting and talent management in a more competitive energy market”.

“Notwithstanding the world’s general trend of decreasing interest to the oil industry, demand for key ‘petroleum’ professions in our country, and in our company, in particular, will remain for decades ahead, although we realise that new professions associated with rapidly developing technologies will emerge. We see great potential in the specialists whose experience and competence helped them to acquire integrated skills and understand the main processes of the entire value chain of oil assets. Our focus as HR specialists will be on developing such a set of skills for our professionals,” she said.

The company has also worked out and approved development programmes for such industrial professions as reservoir engineer and professional foreman.

As a reminder, held every year since 2014 in turns in Nur-Sultan and Baku, Azerbaijan, the Caspian Technical Conference is an important platform for sharing knowledge and discussing the challenges of the oil and gas industry. KMG, as a national company representing Kazakhstan in the oil and gas sector, acts as a co-organiser of the conference in Kazakhstan on a permanent basis. For many years, the company has been supporting the Society of Petroleum Engineers and takes pride in its contribution to SPE’s development in the Caspian region. This year, the forum was held online for the first time. The Continuous Improvement Office, which acted as an organiser on the part of KMG, cooperated with the SPE team to prepare a varied programme of the forum and an interactive exhibition, where KMG also had its virtual display stand.

About SPE

Society of Petroleum Engineers (SPE) is a not-for-profit professional association whose members are engaged in the development and production of energy resources. SPE is a key platform for acquiring technical knowledge related to the exploration and production of oil and gas.

KazMunayGas gets the ESG rating in sustainable development

Fri, 16 Oct 2020 12:09:57 +0500

In 2020, the sustainable development activities of JSC NC “KazMunayGas” (KMG) have been rated at the international level by the Sustainalytics rating agency[1] for the first time. Sustainalytics gives KMG a rating of 69 points, which reflects the company's rather high sustainability indicators (ranks 33rd in the world out of 119 industry players). It ought to be noted that its ESG Risk Rating is 34.5 points. In terms of the ESG Rating components, KMG has been rated as follows: Environmental - 69 points, Social - 70 points and Governance - 67 points.

Compliance with ESG principles implies the implementation of best Environmental, Social and Governance practices. The framework was formulated about 15 years ago by the UN in the form of Principles for Responsible Investment.

Sustainalytics’ high rating confirms the strategic commitment and responsibility of KMG to current and future generations in terms of environmental health and social stability, along with a continuous process of corporate governance improvement.

As a national operator representing the interests of the state in the oil and gas industry of the Republic of Kazakhstan, KMG will continue to improve its operations to meet the highest sustainability standards.

In order to enhance the transparency of its ESG disclosures, since 2012, KMG has been publishing annual reports in accordance with the GRI Standards.

[1] Sustainalytics is an independent ESG research, ratings and analysis firm supporting investors around the world with the development and implementation of responsible investment strategies.

Petrochemical Polypropylene Complex in Atyrau Region Will Initially Make Six Product Grades

Thu, 15 Oct 2020 10:41:42 +0500

“After start-up of the Integrated Gas Chemical Complex (hereinafter – IGCC) in 2021, it is planned to launch production of such polypropylene grades as films and sheets, raffia sheets, fibres, fibre board and cast film,” Bolat Abdualiyev, Managing Director for Technology of Kazakhstan Petrochemical Industries Inc., said at the 7th International Online Conference “Downstream Caspian and Central Asia”.

The design capacity of the complex is 500,000 tonnes of products per year, including dozens of polypropylene grades required for the production of packaging materials, household goods, fibres, threads, medical products, pipes, furniture etc.

“For example, a homopolymer can be used to make components for cars, including seat parts, dashboards, air filter housings, fuel system elements and much more,” B. Abdualiyev said during his speech.

To date, the IGCC construction is 77% complete: design is completed, equipment manufacture and delivery are 70% complete, construction and installation works are 46% complete.

The online event also addressed the digital solutions applied at oil refineries in Kazakhstan. Thus, the implementation of the linear programming system and dedicated Spiral software has saved 530 million tenges of operating expenses at the Atyrau Refinery. This was reported by Mariyam Igissenova, Head of Planning and Automation Unit of the Oil Refining and Petrochemistry Department of JSC NC “KazMunayGas”. Savings from the transformation of the production planning process at the Pavlodar Refinery have amounted to 270 million tenges. Additionally, the refining depth has been increased and losses have been cut.

The KMG Group also presented the following subjects at the conference: "Development of polyethylene production in the Republic of Kazakhstan", "Experience of repairs during quarantine at Atyrau Refinery", "Process efficiency management at RK Refineries".

The Downstream Caspian and Central Asia Conference is the industry’s largest downstream event in the region. It is attended by representatives of all refineries and petrochemical plants, technology and engineering providers from all the countries of the region. More than 30 employees of KMG and its subsidiaries took part in the online event.

KMG reports on the successful completion of the offering in the United States pursuant to Rule 144A and outside the United States pursuant to Regulation S of 12.5-year US $750 million Eurobond issuance

Wed, 14 Oct 2020 11:43:11 +0500

JSC NC "KazMunayGas" (KMG) reports on the successful completion of the offering in the United States pursuant to Rule 144A and outside the United States pursuant to Regulation S of 12.5-year US $750 million Eurobond issuance.

October 14^th – KMG is pleased to announce the successful completion of its offering of new Eurobonds which priced on October 6^th, when KMG opened a global investor book for its new benchmark-sized 12.5-year Eurobonds, successfully pricing the transaction intra-day. Orders from investors in Kazakhstan were collected through the Kazakhstan Stock Exchange (the “KASE”) simultaneously with the international bookbuilding. The initial price guidance was set at yields to maturity of around 3.875%, but backed by strong investor support was later revised to 3.500%, implying a total 37.5bps yield tightening throughout bookbuilding. Upon the books’ closing on the same day, a very robust global demand represented by an order book over U.S.$ 3 bn at peak allowed KMG to price the deal at the lowest-ever USD yield for the company – i.e. at 3.5% for the U.S.$ 750 MM 12.5-year series with the same coupon rate per annum.

The new issue was priced inside the existing KMG yield curve with estimated 12.5 bps negative new issue premium. The final pricing also represents the lowest-ever USD yield achieved by any CIS issuer for a 10+ year new issue.

The Eurobonds were settled on October 14^th. The net proceeds will be used by KMG to fund the early redemption of its outstanding Eurobonds due 2022 and 2023.

The new Eurobonds are rated BBB- (Fitch) / Baa3 (Moody’s) and [are/application has been made for them to be] listed on the London Stock Exchange and the KASE.

J.P. Morgan, MUFG, Halyk Finance and SkyBridge Invest were mandated as joint lead managers and joint bookrunners. White & Case LLP and Kinstellar acted as legal advisers to KMG, while Latham & Watkins LLP and Zan Hub LLP acted as legal advisers to the joint lead managers.

KazMunayGas and LUKOIL Sign Agreement on Al-Farabi Project

Thu, 08 Oct 2020 10:43:29 +0500

On 7 October 2020, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG) Alik Aidarbayev and President of PJSC LUKOIL Vagit Alekperov signed in Moscow an agreement on the Al-Farabi project. The state authorities had earlier amended the State Subsoil Fund Management Programme to rename the I-P-2 site as Al-Farabi subsoil site.

In June 2019, a principles agreement was signed between KMG and LUKOIL in respect of this project, whereby the companies agreed on the basic terms and conditions for its joint implementation. Today's agreement is the next stage of joint activities related to this subsoil site. The following step will involve the signing of a contract for the exploration and production of raw hydrocarbons.

The document signed today defines the rights and obligations of KMG and LUKOIL regarding the operations of the future subsoil user under the Al-Farabi project. The agreement will enter into force after KMG obtains the subsoil use right by entering into a subsoil use contract and completing the planned transaction between KMG and LUKOIL to create a joint venture with the following participatory interests: KMG – 50.01%, LUKOIL – 49.99%.

“The agreement we have signed today again confirms that the partnership between KazMunayGas and LUKOIL is progressively developing. Expansion of the resource base is one of KMG’s strategic objectives, and we intend to continue working to this end. KMG and LUKOIL will make every effort to efficiently develop the Kazakhstan sector of the Caspian Sea,” Alik Aidarbayev said.

KMG’s intention is to apply to the Ministry of Energy of the Republic of Kazakhstan for holding direct negotiations to obtain the subsoil use right for the Al-Farabi subsoil site.

The cooperation between KMG and LUKOIL is of a strategic nature. The companies are partners in such major projects as Karachaganak, Tengiz, Kumkol and the Caspian Pipeline Consortium oil transportation project. On 1 April 2019, the Ministry of Energy of the Republic of Kazakhstan, KMG and LUKOIL entered into a contract for exploration and production of raw hydrocarbons in the Zhenis offshore area.

KMG joined the Caspian Environmental Protection Initiative

Tue, 15 Sep 2020 10:10:01 +0500

On 14 September 2020 in Baku, JSC NC "KazMunayGas", State Oil Company of the Azerbaijan Republic, BP Exploration (Caspian Sea) Limited, Equinor Apsheron AS and TOTAL E&P Absheron B.V. signed the Memorandum of Understanding.

The Memorandum contemplates establishment of the Caspian Environmental Protection Initiative (CEPI). As declared, the main goals of the Initiative are the establishment of the first environmental protection platform and conduct of a joint research by the international oil companies operating in the region. The participating companies will take active joint efforts to address climate change issue, which endangers sustainability of the Caspian region, and to prevent environmental emissions of greenhouse gases and hazardous substances. In addition, cooperation under CEPI implies researching and supporting the best methods, standards and technologies in environmental protection, developing and implementing joint preventive measures to fight climate change, arranging awareness-raising and propaganda campaigns, involving stakeholders in the region and regulatory authorities to take part in resolving environmental protection matters, etc.

“KazMunayGas devotes great attention to such environmental aspects as climate, environmental protection, preserving biodiversity. In our 2028 Strategy, sustainable development is defined as one of our strategic goals. I am convinced that the Initiative will become a perfect venue for dialogue and consulting and a major step towards joint efforts to achieve environmental goals in the Caspian region,” Alik Aidarbayev, Chairman of the Management Board, said.

Involvement in CEPI does not provide for specific liability, certain objectives or deadlines to implement the described activities. CEPI may later include other companies as well.

*More details about environmental activities of KMG can be found in KMG Sustainability Report (report of the Company’s approach to sustainable development, social, economic and environmental responsibility) and in Climate and Water Questionnaires of the Carbon Disclosure Project 2019 (independent organisation which leads the environmental pollution disclosure project).

JSC NC “KazMunayGas” issues 2019 Sustainability Report - Striving for Progress

Mon, 07 Sep 2020 10:06:10 +0500

On 3 September 2020, the Board of Directors of JSC NC “KazMunayGas” (KMG) approved the 2019 Sustainability Report.

Every year, KMG publishes the Sustainability Report which is the Company’s message on progress under the United Nations Global Compact and achievement of the Global Sustainability Goals.

The 2019 Sustainability Report discloses economic, environmental and social performance, includes information about the major sustainability aspects: health and safety, environmental protection, personnel investments, assistance with development of areas within the Company footprint; contains a map of stakeholders and matrix of major sustainability topics for 2019.

The Report was prepared under the GRI Standards (global sustainability reporting standards) and passed materiality assessment according to GRI Materiality Disclosures Service.

We are aware of how important it is to respect the interests of stakeholders and collect Report feedback every year. This practice helps us improve the content and scope of the Report and raise awareness of the employees and other stakeholders about the Company’s sustainability.

JSC NC KazMunayGas announces financial results for the first half of 2020

Thu, 27 Aug 2020 09:23:50 +0500

Joint-stock (JSC) National Company (NC) KazMunayGas (“KMG” or “Company”), Kazakhstan's vertically integrated oil and gas company, published its interim condensed consolidated financial statements for the first half of 2020, prepared in accordance with IAS 34, Interim Financial Reporting with independent auditor’s report on review of interim financial information.

Financial Highlights for the first half of 2020[1]:

Revenue amounted to 2,254 bln tenge (USD 5,570 mln), down by 33.8% year-on-year.
EBITDA decreased by 46.6% year-on-year to 552 bln tenge (USD 1,364 mln);
The Company's net profit decreased by 96.7% year-on-year to 21 bln tenge (USD 51 mln). Net profit for the period attributable to Equity Holders of the Parent Company amounted to 104 bln tenge (USD 256 mln).
FCF was negative at -5 bln tenge (USD -12 mln);
The Company's net debt amounted to USD 6,432 mln as of 30 June 2020, having increased by 4.2% compared to USD 6,171 mln at the end of 2019.
Total debt was at USD 9,822 mln as of 30 June 2020, down by 2.1% compared to 31 December 2019.

	UoM	1H2020	1H2019	%
Dated Brent, average	$/bbl	40.07	65.95	-39.2%
Exchange rate, average	KZT/USD	404.71	379.29	6.7%
Revenue	bln tenge	2,254	3,403	-33.8%
Share in profit of JVs and associates	bln tenge	224	445	-49.6%
Net profit	bln tenge	21	622	-96.7%
Net profit attributable to Equity holders of the Parent Company	bln tenge	104	624	-83.4%
EBITDA	bln tenge	552	1,033	-46.6%
FCF	bln tenge	-5	141	-103.4%
Net Debt[2]	bln tenge	2,598	2,361[3]	10.0%
Gross debt	bln tenge	3,967	3,838³	3.4%

Operating results for the first half of 2020:

Oil and gas condensate production decreased by 3.1% year-on-year and amounted to 11,345 thous. tonnes;
Oil and gas transportation segment showed a decrease of 4.2% and 9.8% and totaled to 37,329 thous. tonnes of oil and 45,172 mln m³ of gas transported correspondingly;
Refining volumes at Kazakh and Romanian refineries decreased by 17.1% year-on-year to 8,290 thous. tonnes.

	1H2020	1H2019	%
Oil production, thous. tonnes	11,345	11,704	-3.1%
Gas production, mln m³	4,321	4,160	3.9%
Oil transportation, thous. tonnes	37,329	38,949	-4.2%
Gas transportation, mln m³	45,172	50,078	-9.8%
Oil refining, thous. tonnes	8,290	9,997	-17.1%

For more information, please see the Trading Update for the first half of 2020: http://ir.kmg.kz/.

Financial Highlights for the first half of 2020

Revenue and other income

Revenue for the first half of 2020 amounted to 2,254 bln tenge (USD 5,570 mln), having decreased by 33.8% year-on-year. The main negative impact on revenue dynamics was mainly attributable to a decrease in average Brent crude oil price of 39.2% year-on-year, lower volumes of oil trading and sales of petroleum products at KMG International (KMG I), which was slightly offset by the weakening of the average exchange rate of tenge vs. the US dollar by 6.7%. Revenue from export sales of Kazakh gas decreased by 3.6% to 328 bln tenge (USD 809 mln), mainly due to lower gas export volumes.

Earnings from shares in the profit of joint ventures and associates decreased by 49.6% year-on-year to 224 bln tenge (USD 554 mln), mainly attributable to lower earnings from shares in the profit of Tengizchevroil LLP (TCO), JSC Mangistaumunaigas (MMG), KMG Kashagan B.V (Kashagan), KazRosGas LLP (KazRosGas) and the Beineu-Shymkent Gas Pipeline (BSGP). The earnings from shares in the profit of TCO and MMG decreased by 68.9% and 89.7% year-on-year, amounting to 70 bln tenge (USD 172 mln) and 5 bln tenge (USD 12 mln), respectively, reflecting lower average oil prices, and lower production volumes. The earnings from share in Kashagan's loss amounted to 11 bln tenge (USD 28 mln) due to lower oil prices, higher depreciation and amortization expenses in cost of sales, higher selling expenses, which was partially offset by an increase in oil production. The earnings from shares in the profit of KazRosGas and BSGP decreased, reflecting a recognition of foreign exchange losses amidst the weakening of tenge vs. the US dollar.

Costs and other expenses

Cost of purchased oil, gas, petroleum products for further sale and the cost of refining crude oil in the reporting period decreased by 42.0% year-on-year to 1,126 bln tenge (USD 2,782 mln). The decrease was due to lower cost of purchased oil for resale, lower cost of oil for refining, and lower oil prices, which was partially offset by an increase in the cost of purchased gas for resale and the weakening of tenge vs. the US dollar. The cost of purchased oil for resale decreased by 41.5% year-on-year to 652 bln tenge (USD 1,612 mln). The cost of oil for refining slid by 66.1% year-on-year to 153 bln tenge (USD 378 mln). At KazTransGas JSC (KTG), the cost of purchased gas was at 197 bln tenge (USD 488 mln) in the first half of 2020.

Production expenses in the first half of 2020 increased by 8.0% year-on-year to 364 bln tenge (USD 898 mln).

Taxes other than income tax decreased by 38.3% year-on-year to 139 bln tenge (USD 345 mln), mainly due to lower rent tax on crude oil export, export customs duty, and mineral extraction tax amidst a decrease in oil prices.

Finance costs for the first half of 2020 amounted to 135 bln tenge (USD 334 mln), down by 15.9% year-on-year. The decrease was mainly attributable to the early fulfillment of obligations under the TCO crude oil prepayment agreement at the end of 2019.

Impairment of assets

Amidst significant changes in market prices in the first half of 2020, weighted by concerns over the COVID-19 pandemic and its impact on the economy, assumptions on Brent crude oil price, forecasted refinery margins, exchange rate and inflation were revised during impairment testing. KMG recognized an impairment of 225 bln tenge (USD 557 mln) in the interim consolidated statement of comprehensive income for the first half of 2020. This includes asset impairment in Embamunaigas JSC (EMG) at 60 bln tenge (USD 149 mln), KMG International at 159 bln tenge (USD 393 mln), and others at 6 bln tenge (USD 15 mln).

Net profit

In the reporting period, the Company's net profit decreased by 96.7% year-on-year to 21 bln tenge (USD 51 mln) due to a decrease in average oil price, a decrease in revenues and earnings from a share in the profit of JVs and associates, and a recognition of asset impairment. This was partially offset by a lower cost of purchased oil, gas, petroleum products, and taxes other than income tax.

Net income for the period attributable to the Equity Holders of the Parent Company amounted to 104 bln tenge (USD 256 mln).

Taxes and other obligatory payments amounted to 539 bln tenge (USD 1,331 mln), down by 26.4% year-on-year.

Debt

Total debt was at 3,967 bln tenge (USD 9,822 mln) as of 30 June 2020, up by 3.4% compared to 31 December 2019. Total debt including guarantees[4] was at 4,216 bln tenge (USD 10,438 mln) as of 30 June 2020, up by 2.8% (in the US dollar terms: a decrease of 2.6%) from 31 December 2019.

A 130 bln tenge increase in gross debt mainly reflects the impact of the foreign exchange rate on the US Dollar-denominated bonds and loans. Gross debt in the US dollar terms decreased by 2.1% to USD 9,822 mln as of 30 June 2020 from USD 10,030 mln at year-end 2019. In January 2020, Atyrau Refinery (ANPZ) received a long-term loan from DBK in the amount of 46 bln tenge (USD 114 mln) to refinance a foreign currency loan received from The Export-Import Bank of China (Exim Bank), which was obtained to fund new oil refining facilities. In May 2020, KTG made early partial redemption of bonds for the nominal amount of USD 43.68 mln (18 bln tenge), paying in cash USD 41 mln (18 bln tenge) at a discount price.

Consolidated cash and cash equivalents and cash in the form of deposits were at 1,369 bln tenge (USD 3,390 mln), having decreased by 7.3% from 31 December 2019. The decrease was due to capital expenditures in cash terms in the amount of 227 bln tenge (USD 561 mln), and repayment of loans of KZT 181 bln tenge (USD 448 mln). In the US dollar terms, consolidated cash and cash equivalents and cash in the form of deposits decreased by 12.2% to USD 3,390 mln as of 30 June 2020 from USD 3,859 mln as of 31 December 2019.

As a result of the above, KMG's net debt amounted to 2,598 bln tenge as of 30 June 2020 (USD 6,432 mln), which is 10.0% higher compared to 31 December 2019 in tenge terms (in the US dollar terms: an increase of 4.2%).

Key corporate events in the first half of 2020:

On 27 March 2020, S&P Global ratings affirmed its "BB" rating and revised its outlook on KMG from “stable” to "negative" on the back of lower oil prices;
On 27 March 2020, Fitch affirmed its rating at the level “BBB-” with a Stable Outlook;
In May 2020, KTG made an early partial redemption of its guaranteed bonds due in 2027 for the nominal amount of USD 43.68 mln;
After announcing dividends for 2019 in May 2020 in accordance with the decision of Samruk-Kazyna and the National Bank of Kazakhstan, KMG paid dividends in a full amount of 82 bln tenge (USD 202 mln). This includes dividends to Samruk-Kazyna in the amount of 74 bln tenge (USD 183 mln), and dividends to the National Bank of Kazakhstan in the amount of 8 bln tenge (USD 19 mln).

[1] The amounts were converted to the US dollars for user convenience at average exchange rates in corresponding periods (average rates for the first half of 2020 and 2019 were at 404.71 and 379.29 USDKZT, respectively; exchange rates at the end of periods - as of 30 June 2020 and 31 December 2019 were at 403.93 and 382.59 USDKZT, respectively).

[2] Net Debt as of 30 June 2020 does not include guaranteed obligations on a syndicated loan of Beineu-Shymkent Gas Pipeline (BSGP) in the amount of 247 bln tenge (USD 612 mln), guaranteed obligation on a loan of JSC “AstanaGas KMG” in the amount of 1.9 bln tenge (USD 4.6 mln), lease liabilities in the amount of 46 bln tenge (USD 113 mln); and Net Debt as of 31 December 2019 does not include guaranteed obligations on a syndicated loan of BSGP in the amount of 262 bln tenge (USD 684 mln), guaranteed obligation on a loan of JSC “AstanaGas KMG” in the amount of 1.9 bln tenge (USD 4.9 mln) and lease liabilities in the amount of 47 bln tenge (USD 123 mln).

[3] As of 31 December 2019

[4] Nominal amount of guaranteed obligations.

Changes to NC KazMunayGas Board of Directors announced

Tue, 25 Aug 2020 11:09:21 +0500

25 August 2020, Nur-Sultan — Samruk-Kazyna JSC (“the Fund”) announced the decisions taken by its Management Board at a meeting held in Nur-Sultan on 17 August 2020. Due to the expiry of the term of office of the existing Board of Directors (“the Board”) of NC KazMunayGas (“KMG” or “Company”), Samruk-Kazyna’s Management Board has approved the following composition of KMG’s Board effective from 17 August 2020:

Christopher Walton, Chairman and Independent Non-Executive Director
Alik Aidarbayev, Executive Director and Chairman of the Management Board
Tim G. Miller, Independent Non-Executive Director
Philip Malcolm Holland, Independent Non-Executive Director
Uzakbay Karabalin, Non-Executive Director, representative of “Samruk-Kazyna” JSC
Almasadam Satkaliyev, Non-Executive Director, representative of “Samruk-Kazyna” JSC
Anthony Espina, Non-Executive Director, representative of “Samruk-Kazyna” JSC

The abovementioned directors have been appointed for a period of three years in line with the rotation plan stated in the Fund’s Corporate Governance Code. It should be noted that the previous composition of the board of directors consisted of nine people. Christopher Walton, Uzakbay Karabalin, Almasadam Satkaliyev, Anthony Espina and Alik Aidarbayev will continue their work as members of the Board.

The Company would like to thank all the members of the previous Board for their outstanding work. Especially Baljeet Kaur, Stephen Whyte, Philip Dayer and Luís Palha da Silva for their contributions to the development of NC KazMunayGas.

At the same time, the Company is pleased to welcome Tim Miller and Philip Holland as independent directors. Tim has a wealth of experience in the oil and gas industry and brings with him extensive international expertise. Philip is an expert in the implementation of large-scale projects across the world.

KMG will continue to work to strengthen the Board in line with international corporate governance standards.

For further information, please visit http://ir.kmg.kz or contact:

Investor relations

Tel: +7 7172 78 62 27

Email: ir@kmg.kz

Public relations

Tel: +7 7172 78 63 92

Email: press@kmg.kz

About JSC National Company KazMunayGas:

JSC National Company KazMunayGas (KMG) is Kazakhstan's leading vertically integrated oil and gas company, operating assets across the entire production cycle from the exploration and production of hydrocarbons to transportation, refining and specialised services. Established in 2002, the company represents the government’s interests in the national oil and gas industry.

KMG’s significant assets are as follows:

Upstream: Tengizchevroil (TCO) - 20%, Karachaganak (KPO) - 10%, Kashagan - 8.44%^[1], Ozenmunaigas (OMG) - 100%, Mangistaumunaigas (MMG) - 50%, Embamunaigas (EMG) - 100%, Kazgermunai (KGM) - 50%, Petrokazakhstan Inc (PKI) - 33.0%, Karazhanbasmunai (KBM) - 50%, KazakhOil Aktobe (KOA) - 50%, KazakhTurkmunai (KTM) - 100%, KazMunayTeniz - 100%

Midstream: KazTransOil - 90% (Kazakhstan China Pipeline (KCP) - 50%, Munai Tas - 51%, Batumi Oil Terminal - 100%), CPC - 20.75%[2], Kazmortransflot - 100%, KazTransGas - 100% (ICA - 100%, AGP - 50%, KTG Aimak - 100%, BSGP - 50%, KazRosGas - 50%).

Downstream: Pavlodar refinery - 100%, Atyrau refinery - 99.53%, Shymkent refinery - 49.72%, KMG International - 100% (Petromidia refinery - 54.63%, Vega refinery - 54.63%)

[1] In October 2015, KMG sold 50% of its shares in Kashagan to Samruk-Kazyna with a call option to buy back all part of shares at any time between 2020 and 2022. KMG and Samruk-Kazyna own 16.88% in total.

[2] 19% through the KMG itself and 1.75% through Kazakhstan Pipeline Ventures (KPV).

KLPE and TCO Signed Basic Terms of Gas Separation Plant Design

Thu, 20 Aug 2020 08:22:37 +0500

On 18 August 2020, Samruk-Kazyna (Fund) CEO Akhmetzhan Yessimov, and KazMunayGas CEO Alik Aidarbayev, visited Atyrau plants.

During the visit, they held meeting with the Fund’s portfolio companies, where they discussed construction of Atyrau Polyethylene Plant with the 1.25 mln tonne annual capacity. To recap, earlier Borealis used to be a project partner. However, Borealis decided to quit the project because of the global crisis caused by COVID-19 and low oil price, which lead to investment slump. Yet, the Fund, represented by KLPE (a company controlled by KMG), went ahead with the project in furtherance of the petrochemical industry development. A good progress in this task was made under KMG's assistance. Process flow KMG proposed, in this context, proved to be serviceable.

Now a 9.7 bln m³ Gas Separation Plant (GSP), which will produce ethane from dry gas to be supplied to the future Polyethylene Plant, is under design. The Plant is the only of its kind in Kazakhstan. The GSP is planned on Tengiz Project territory, which is the best logistic endurance solution.

To date, the GSP feasibility study (Pre-FEED) is prepared in cooperation with Tengizchevroil (TCO).

Signing of GSP Design Basic Terms Agreement between KLPE and TCO means the next logical step – preparation of front-end engineering design (FEED). The agreement serves to provide statutory basis for partnership relations between KLPE and TCO in terms of GSP design activities. FEED package for this large-scale project will be prepared by Kazakh company KLPE with TCO's assistance.

Reference:

United Chemical Company and Polymer Production are shareholders of KLPE. From 26 June 2019, KLPE is beneficially owned by KMG. In 2019, the Project Feasibility Study with positive economic indicators was completed. The project goal is to design and manufacture large tonnage polyethylene with the 1.25 mln tonne annual capacity, which will be sold domestically and internationally.

JSC NC KazMunayGas 1H 2020 Trading Update

Mon, 03 Aug 2020 03:33:06 +0500

Highlights for the first half of 2020:

Oil and gas condensate production decreased by 3.1% year-on-year and amounted to 11,345 thous. tonnes;
Oil and gas transportation segment showed a decrease of 4.2% and 9.8% and totaled to 37,329 thous. tonnes of oil and 45,172 mln m³ of gas transported correspondingly;
Refining volumes at Kazakh and Romanian refineries decreased by 17.1% year-on-year to 8,290 thous. tonnes.

	1H 2020	1H 2019	%
Oil production, thous. tonnes	11,345	11,704	-3.1%
Gas production, mln m³	4,321	4,160	3.9%
Oil transportation, thous. tonnes	37,329	38,949	-4.2%
Gas transportation, mln m³	45,172	50,078	-9.8%
Oil refining, thous. tonnes	8,290	9,997	-17.1%

Operational results the first half of 2020[1]

Upstream

In the first half of 2020, KMG’s oil and gas condensate production amounted to 11,345 thous. tonnes (467 kbopd), showed a decrease by 3.1% year-on-year. Natural and associated gas production increased by 3.9% year-on-year to 4,321 mln m³.

Oil production, thous. tonnes	1H 2020	1H 2019	%
Tengiz (20%)	2,852	2,992	-4.7%
Kashagan (8,44%)	673	472	42.5%
Karachaganak (10%)	562	535	5.2%
OMG (100%)	2,746	2,751	-0.2%
MMG (50%)	1,526	1,579	-3.3%
EMG (100%)	1,353	1,430	-5.4%
Other	1,631	1,946	-16.2%
Total	11,345	11,704	-3.1%

Oil production and natural and associated gas production at Tengiz, Kashagan, and Karachaganak increased by 2.2% and 4.3% year-on-year and amounted to 4,088 thous. tonnes (179 kbopd) and 3,021 mln m³, respectively.

KMG’s share in oil production at Tengiz declined by 4.7% year-on-year and amounted to 2,852 thous. tonnes (125 kbopd) and gas production decreased by 4.0% to 1,571mln m³, respectively. A significant impact on the decline in oil and gas production was exerted by a reduction in planned production.

Oil production at Kashagan increased by 42.5% year-on-year to 673 thous. tonnes (29 kbopd). Natural and associated gas production increased by 46.0% year-on-year and amounted to 406 mln m³. Oil and gas production increased as a result of the conducted overhaul in 2019, which influenced the increase in the operational efficiency of the offshore and onshore facilities, increase the injection fund from 4 to 6 wells, installation of additional reboilers on oil processing lines, and new wells commissioning. In the first half of 2020, the average gross daily production at Kashagan amounted to 354 kbopd.

Oil and condensate production at Karachaganak increased by 5.2% year-on-year and amounted to 562 thous. tonnes (24 kbopd). Gas production amounted to 1,044 mln m³, up by 6.3% year-on-year. The growth of oil and gas production is associated with modernisation of the facilities of Karachaganak Processing Complex (KPC) and gas-processing units (Unit 2 and Unit 3) after planned preventive maintenance in September-October 2019.

Oil production at KMG-operated assets decreased by 5.8% year-on-year and amounted to 7,257 thous. tonnes (289 kbopd) while gas production increased by 2.9% to 1,300 mln m³. The decrease in oil production volumes at KMG-operated assets was mainly attributable to the natural decline in production levels at JV Kazgermunai LLP and JSC PetroKazakhstan Inc. by 29.6% and 22.9%, respectively.

Midstream

In the first half of 2020, oil transportation decreased by 4.2% year-on-year and amounted to 37,329 thous. tonnes[2] (net to KMG).

Oil transportation, thous. tonnes	KMG’s share	100%	6М2020 vs 6М2019, %
KazTransOil (90%)	21,510	21,510	-3.1%
Kazakhstan-China Pipeline (50%)	3,766	7,532	-6.9%
Munai Tas (51%)	686	1,345	-22.9%
Caspian Pipeline Consortium (20,75%)	6,473	31,195	2.3%
Kazmortransflot (100%)	4,894	4,894	-10.8%
Total	37,329	-	-

The volume of oil transportation through the trunk pipelines decreased by 3.1% year-on-year and amounted to 32,435 thous. tonnes (net to KMG). The slight decrease is explained by the limited oil supply from CNPC Aktobemunaigas JSC due to finding and crucial excess of organochlorine compounds in oil in January 2020 and the decrease in oil supply from oil companies operating the Kumkol group of fields.

In the first half of 2020, offshore oil transportation decreased by 10.8% year-on-year to 4,894 thous. tonnes. The decrease is majorly attributable to lower dispatch volumes in the Mediterranean Sea.

In the first half of 2020, gas transportation through KMG’s gas pipelines reduced by 9.8% year-on-year to 45,172 mln m³. The decline is mainly attributable to lower Central Asian gas transit volumes to China, a decrease in transit volumes of Russian gas from PJSC Gazprom through the territory of Kazakhstan, and a decrease in export supplies of Karachaganak gas to Russia.

Gas transportation, mln m³	KMG’s share	100%	6М2020 vs 6М2019, %
Intergas Central Asia (100%)	30,982	30,982	-10.4%
Asia Gas Pipeline (50%)	9,629	19,258	-17.4%
Beineu-Shymkent Gas Pipeline (50%)	3,192	6,383	24.3%
KazTransGas Aimak (100%)	1,369	1,369	7.4%
Total	45,172	-	-

In the first half of 2020, gas sales slightly increased by 1.6% year-on-year to 11,813 mln m³. Exports of sales gas amounted to 4,224 mln m³, of which 84% was exported to China under the agreement dated in October 2018 on the supply of natural gas to China in the amount of up to 10 bln m³. Because of the pandemic in the first half of 2020, gas exports to China were below the planned volumes however the decline in actual export volumes was only 1.5% decrease year-on-year.

Trading

The sales volume of KMG's own produced oil and gas condensate decreased by 3.1% in the first half of 2020 year-on-year and amounted to 11,447 thous. tonnes, of which 72% was exported.

In the first half of 2020, the domestic supply of own produced oil and gas condensate amounted to 3,245 thous. tonnes, including the crude oil supply from KMG-operated assets (JSC OzenMunayGas, JSC EmbaMunayGas, and Kazakhturkmunay LLP) in the amount of 1,696 thous. tonnes to Atyrau and Pavlodar refineries for further oil refining and sale of oil products.

Downstream

In connection with the introduction of quarantine measures in almost all cities of Kazakhstan in the first half of 2020, the demand for the main types of oil products in Kazakhstan significantly decreased, which had a corresponding impact on the production activities of Kazakhstani oil refineries. The volumes of oil refining and production of oil products were reduced to avoid overstocking, while the production process was not stopped, the utilization of refineries was balanced in accordance with the required volume of oil products production. Currently, the refineries continue their production activities.

Oil refining, thous. tonnes	6М 2020	6М 2019	%
Atyrau refinery (100%)	2,633	2,699	-2.4%
Pavlodar refinery (100%)	2,056	2,475	-16.9%
Shymkent refinery (50%)	1,135	1,315	-13.7%
Caspi Bitum (50%)	196	181	8.5%
Petromidia (54,63%)	2,116	3,126	-32.3%
Vega (54,63%)	154	202	-23.6%
Total	8,290	9,997	-17.1%

In the first half of 2020, refining volume decreased by 17.1% and totaled to 8,290 thous. tonnes:

Refining volumes of Kazakh refineries declined by 9.7% and amounted to 6,020 thous. tonnes. The reduction is due to a decrease in oil refining volumes at the Pavlodar and Shymkent to avoid overstocking of oil products and due to the impact of the coronavirus infection COVID-19 on the consumption of oil products;
Refining at KMG International refineries (Petromidia, Vega) significantly decreased by 31.8% year-on-year to 2,270 thous. tonnes as a result of a production shutdown at Petromidia refinery related to scheduled overhaul from March 15 to May 1, 2020.

In the first half of 2020, the production of oil products at Kazakh and Romanian refineries decreased by 18.3% year-on-year to 7,646 thous. tonnes:

Production of oil products at Kazakh refineries decreased by 11.3% year-on-year to 5,415 thous. tonnes due to the decrease in the oil refining volumes as a result of the impact of the coronavirus infection COVID-19 on the consumption of oil products;
Oil products production at KMG International refineries (Petromidia, Vega) in Romania decreased by 31.5% year-on-year to 2,231 thous. tonnes as a result of production shutdown at Petromidia refinery due to scheduled overhaul.

[1] Throughout the text, operating results are based on the net to KMG’s operating share, unless specifically indicated otherwise.

[2] Oil transportation volume takes into account the transportation volume of each pipeline company, including the operating share of KMG. Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation.

New KMG Camps to be Built in Aktobe Region before the End of the Year

Fri, 24 Jul 2020 12:11:19 +0500

On 23 July 2020, Alik Aidarbayev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG), during his working visit to Aktobe Region, met with Ondassyn Urazalin, Head of the region. They discussed issues related to the fight against the coronavirus disease at KMG enterprises and the measures being taken to prevent its spread. A. Aidarbayev noted that the Company had preserved jobs and remunerations in the region in spite of the negative impact of market conditions.

“KazMunayGas has always positioned itself as a socially responsible company, and we will keep following our course by being actively engaged in the life of the region. We hope that the fruitful cooperation with the region akimat for the benefit of the population will go on,” KMG’s CEO stated.

It was noted that LLP Kazakhturkmunay had been supplying natural gas to the residents of Zharkamys village (Baiganin District) at no charge since 2007, and LLP KazakhOil Aktobe annually provided sponsorship support to those residing in Zhagabulak, Kemershi, and Birlik settlements near Alibekmola and Kozhassai fields.

In Aktobe, A. Aidarbayev held a meeting with the CEOs of subsidiaries – LLP Kazakhturkmunay, LLP KazakhOil Aktobe, and LLP Urikhtau Operating – where he positively evaluated their production and economic performance. He also mentioned the stable coronavirus situation at the fields thanks to the sanitary and epidemiological measures implemented in due time.

To check out the situation at the sites, A. Aidarbayev visited the Company’s production facilities in the region. During the trip to Karatobe South and Laktybai fields, KMG’s CEO and the Aktobe Region Akim laid the foundation stone for a new camp. It should be noted that the production personnel currently live in accommodation wagons built for temporary use during the pilot operation of the Karatobe South and Laktybai fields.

“KMG has to solve several problems, which include ensuring uninterrupted operations. Therefore, in spite of the difficult economic situation, the Company does its best to improve the social amenities for oil workers and to provide the most comfortable conditions for those on shift,” highlighted A. Aidarbayev.

As noted by Talgat Issayev, General Director of LLP Kazakhturkmunay, canteens, health posts, a gym, and utility premises would be built in addition to accommodation units. Special attention is being paid to the safety of employees. Buildings are connected with transit corridors. The entire territory will be furnished with passes, pavements, plants, and lighting. The construction is to be completed before the end of the year.

Another visit was paid to the gas refinery at the Kozhassai field. The raw material base has been efficiently used, the volume of refined associated petroleum gas has increased, and air emissions of hazardous substances have been significantly reduced since the refinery was commissioned, which has had a positive effect on the region's environment.

Alik Aidarbayev: KazMunayGas is Mindful of its Obligations

Thu, 23 Jul 2020 12:09:23 +0500

On 22 July 2020, Alik Aidarbayev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG), made a working visit to Atyrau Region. During the meeting with Makhambet Dosmukhambetov, Akim of the region, the KMG CEO discussed the epidemiological situation at the KMG enterprises based in the region as well as the sponsorship support provided to fight the coronavirus pandemic.

“Our subsidiaries in the region actively cooperate with the akimat and give significant funds to support the population and healthcare facilities. For example, Embamunaigas has allocated 300 million tenge. These funds have been used to purchase medical equipment and medicines required for the region's population as well as foods, consumer electronics, hygiene products, and personal protective equipment for quarantine hospitals. We believe that everyone has a duty to render every possible assistance in these times that are challenging for all of us,” A. Aidarbayev said.

Additionally, the KMG CEO held a teleconference with the heads of subsidiaries in the region to discuss daily operations, implementation of the anti-crisis strategy, fight against the pandemic, and strict adherence to the sanitary and epidemiological rules. Alik Aidarbayev expressed his condolences to the families and next of kin of the employees who died of the coronavirus disease and pneumonia, and wished quick recovery to the colleagues who got sick.

The Chairman of the KMG Management Board also visited the Atyrau Refinery, where he had a look at the progress of the scheduled repair and inspected the building of a new healthcare centre set up as a public private partnership based on the Atyrau Refinery health post. The healthcare centre is provided with modern medical equipment, so the employees will receive quality medical care right at the refinery premises. It should be noted that the centre has an isolation zone where the employees will be delivered directly after they show COVID-19 symptoms.

Aidarbayev drew the attention of the refinery management to the complaints of Atyrau residents.

“The city residents have repeatedly raised grievances against unpleasant odour coming from the evaporation fields in the left-bank part of the city, which is known as Tukhlaya Balka. We are aware of this problem. But let us speak frankly. Waste water is discharged to Tukhlaya Balka from two sources: the city and the Atyrau Refinery. However, for several decades, the majority of contaminations have been due to the city sewage drains that undergo no treatment, while the refinery installed mechanical and biological treatment facilities which meet all necessary standards and specifications a long time ago. Moreover, they are upgraded on a regular basis. The city, on the other hand, is only now building sewage treatment facilities. As a socially responsible company, we will certainly be engaged in the reclamation of this field and take utmost care of the region's environment and population. However, people should understand how today's problem has come to exist. In this regard, I believe we should cooperate more closely with the region's public activists and regularly explain the processes that take place at the refinery,” instructed the KMG CEO.

In his turn, Sh. Danbai, General Director of LLP Atyrau Refinery, spoke about the progress of the Tazalyq project. According to him, the design and survey work for the reconstruction of the mechanical treatment facilities has been 90% completed, and an engineering survey for the upgrade of the biological treatment facilities has been performed. The design and survey work under the evaporation field reclamation project has been 60% completed.

Another facility visited by the KMG management was the construction site of the Integrated Gas Chemical Complex KPI. The project progress is currently 73.5%. Concrete works are being performed, and underground and above-ground pipelines, metal structures, sandwich panels, water storage tanks, etc. are being assembled at the facility. The construction progress is from 51% to 97% for different facilities. The manufacture of pipe spools and assembly of industrial pipelines show the least progress. This has to do with the quarantine, due to which some employees had to shift to remote working. Some foreign specialists engaged in the most complicated works and assembly of special equipment were also unable to come to the country because of the ban on flights.

The integrated gas chemical complex project was placed under management of KMG in June 2018. Since then, the construction has entered its active phase. The complex will allow producing up to 500 thousand tonnes of polypropylene annually.

KMG Allocates 2.6 Billion Tenge to Fight the Coronavirus Pandemic

Tue, 21 Jul 2020 12:06:45 +0500

On 20 July 2020, Alik Aidarbayev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG), during his working visit had a meeting with Serikbai Trumov, Head of Mangistau Region, to discuss the epidemiological situation at KMG enterprises and the measures taken by the Company to prevent the spread of coronavirus. During the meeting, the KMG CEO also told about the sponsorship and charity support KazMunayGas provides to the region's population.

“We have joined the fight against the pandemic since its first days. Our Company shows concern for the population of the regions where it operates. KazMunayGas has already provided sponsorship support for a total of 2.6 billion tenge, including 1.8 billion tenge in Mangistau Region. These funds were allocated for the purchase of medical equipment, mobile ICUs, oxygen concentrators, and lung ventilators, all of which were urgently needed. KMG subsidiaries have also provided vehicles and personal protective equipment to the akimats and healthcare facilities as well as food baskets to low-income families. We will keep on providing every possible support to doctors and local authorities in the common fight against the coronavirus disease,” A. Aidarbayev noted at the meeting.

During his visit, he got to see the activities of the Aktau healthcare centre that performs pre-shift PCR tests for the employees of KMG subsidiaries and service companies. Up to 200 persons per day are being tested, which allows identifying those infected with COVID-19 and stopping the disease from spreading at the production facilities.

Additionally, Alik Aidarbayev held a teleconference in Zhanaozen with the CEOs of JSC Ozenmunaigas, JSC Mangistaumunaigas, JSC Karazhanbasmunai, and the service companies. They discussed issues related to daily operations, implementation of the anti-crisis strategy, fight against the pandemic, and strict adherence to sanitary and epidemiological rules.

Aidarbayev also expressed his condolences to the families and next of kin of the employees who died of the coronavirus disease and pneumonia, and wished quick recovery to the colleagues who got sick.

“Unfortunately, some of our colleagues fell victims to the coronavirus disease as well. Each of them was part of the large KazMunayGas family and contributed to the Company’s development. It is a grievous loss for all of us. We will always cherish the memory of them, treasure up in our hearts,” Alik Aidarbayev noted.

In Zhanaozen, the KMG CEO visited the rehabilitation centre for children with disabilities to be opened this September. JSC Ozenmunaigas has allocated 50 million tenge to repair and equip the premises for the centre. Up to 700 children per year can be rehabilitated there.

Alik Aidarbayev also visited the temporary healthcare centre based on the premises of Ozenmunaigas, where 65 reserve beds had been prepared to reduce the load on the city infectious disease hospitals. The capacity of the centre is said to be up to 500 patients per day. The KMG CEO instructed management of Ozenmunaigas to take measures to provide the temporary healthcare centre with the necessary equipment. It is expected to further operate as a fully-functional healthcare centre for the diagnostics, treatment, and recovery of Ozenmunaigas employees and their family members.

Reference Information about the Sponsorship Support Provided in Mangistau Region

JSC Mangistaumunaigas has allocated 475 million tenge to purchase a computed tomography scanner that is to be installed at the Mangistau regional hospital shortly. Twenty lung ventilators and three mobile ICUs worth over 817 million tenge have been purchased for local healthcare facilities. Oil workers of the Zhetybaimunaigas production department volunteered to organise the assembly, filling, and delivery of oxygen cylinders to local hospitals. With the Company’s sponsorship support, 9 highly-skilled infection disease doctors, pulmonologists, general practitioners, and intensivists from the Russian Federation arrived in Aktau.

JSC Ozenmunaigas has purchased 2 new specialised mobile ICUs worth 40 million tenge for the Zhanaozen municipal hospital. The Company is actively supporting life-sustaining activities in Zhanaozen during the lockdown. Specifically, the Company has provided 6 infrared thermal imagers and several specialised machines to perform disinfection in the town. Local Trade Union of Ozenmunaigas Employees Public Association has purchased 10 oxygen concentrators for the amount of 5 million tenge, 4 patient monitors for 6.9 million tenge, 100 oxygen reducers, and 150 meters of oxygen hose for 723 thousand tenge for the municipal hospital.

JSC Karazhanbasmunai has provided sponsorship support to the Mangistau Region akimat for a total of 20 million tenge to purchase oxygen concentrators for infectious and temporary hospitals of the region. To the Tupkaragan district akimat, 7.4 million tenge have been allocated to purchase oxygen concentrators, medical and personal protective equipment for the temporary hospital. The Company plans to allocate another 43.5 million tenge to cover the expenses for the group of physicians invited from Russia and to purchase the necessary medicines.

LLP NMSC Kazmortransflot plans to deliver 20 lung ventilators and personal protective equipment to the Mangistau Region akimat until the end of this month for further allocation among healthcare facilities. The total amount of support is over 320 million tenge.

LLP JV CASPI BITUM has paid for a month’s hotel stay for nine physicians who arrived from the Russian Federation. LLP KazGPP has allocated 100 protective overalls for the municipal multi-field hospital.

Oil Gusher Produced in the Field in Mangistau Region

Tue, 23 Jun 2020 11:35:08 +0500

JSC NC "KazMunayGas” (KMG) informs that the oil exploration works in the exploration block of Becturly East in Mangistau Region have produced an oil gusher.

The oil flow at a rate of up to 100 m³/day, with a 12-mm choke (oil gravity is 0.82-0.85 g/cm³), is the result of a comprehensive geological and geophysical study of historical data, basin modelling, high-tech seismic exploration works, and the optimum placement of the BE-1 exploration well from the Middle-Jurassic interval. In addition, oil had been produced (oil gravity is 0.82 g/cm³) in previous exploration areas by sample drawing from the Middle-Jurassic and Lower-Jurassic sediments, and hydrocarbon indicators were also identified in Trias.

Field geophysical surveys and hydrodynamic research are currently under way to obtain additional information about the properties of the oil and gas horizon.

The Becturly East site is located in Karakiya District of Mangistau Region, in close proximity to such operating oil and gas fields as Uzen-Karamandybas, Zhetybai, Becturly, East Zhetybai, Aktas, etc. The project operator at Becturly East is Becturly Energy Operating LLP, which is jointly controlled by JSC NC "KazMunayGas" (50%) and Kokel Munay LLP (50%).

It should be noted that KMG cooperates with partners in the development of new fields on a carry financing basis, which means that the costs of the exploration works are borne by the partner. If the exploration results are successful, the partner will later recover the money from production of the oil.

POCR LLP Reaches Full Processing Capacity after Maintenance

Fri, 19 Jun 2020 11:23:17 +0500

On 14 June 2020, Pavlodar Oil Chemistry Refinery reached full processing capacity after the scheduled preventive maintenance.

During the maintenance period from 25.04.2020 to 14.06.2020, all the required works were done to ensure safe operation of the refinery in 2020-2021. The major works included internals replacement of K-101, K-103 columns, repairs of process furnaces P-101, P-102 with coils being replaced, repair of the PK-101/2 piston compressor of the deep conversion facility.

Adsorbents were reloaded at the CDU isomerisation plant.

The instrumentation was upgraded at the S-300/1 section of the LK-6U complex. Obsolete and worn out pneumatic instruments were replaced with modern electronic ones. All 95 units of the new instruments were connected to the distributed control system as part of the Instrumentation Upgrade in S-300/1 project, which will allow to implement centralised process monitoring and control in the section. All installation, hook-up and start-up to be done during the stalled process were fully completed.

During the scheduled preventive maintenance, technical inspection, examination, and safety expert review were made in respect of pressure equipment and vessels (329 units), process pipelines (1,152 units), and process furnaces; rejected components and devices of process equipment and pipelines were repaired and replaced in accordance with the rules and requirements for industrial safety at hazardous industrial facilities.

As the maintenance works at the refinery were performed during the COVID-19 quarantine, all preventive measures were taken.

Serious efforts were made to ensure timely transportation of contractors’ specialists and supply of materials and equipment. All the staff of the contracting organisations engaged in the works were PCR-tested, had their body temperature taken, and all the equipment, pipelines and vehicles entering the refinery premises were disinfected.

The equipment was cleaned by contractors SС Intra and Total Service LLP. Inspection of equipment and safety expert review were made with the involvement of specialised expert organisations, such as Incom company LLP, Kazprombezopasnost PV LLP, Defektoskopia RPA LLP (Karaganda). Metal structures and waste-heat exchangers were examined by Gormontazhproekt LLP (Karaganda).

Process equipment was repaired by: Megastroyplus LLP, Alyansstroymontazh LLP (Shymkent), Repair and Assembly Department (Shymkent), Bert LLP, Neftegazstroy PV LLP.

Works started in 2019 intended to ensure further safe operation of the process equipment at the S-100 section of the crude vacuum unit and the S-300 diesel fuel hydrotreatment section of the crude distillation unit were continued during the maintenance 2020 period. In 2019, JSC “D. Sokolskiy Institute of Fuel, Catalysis and Electrochemistry” conducted a corrosion audit and developed corrosion control data sheets for these sections.

The same works are under way in 2020 in respect of the S-200/1 naftha hydrotreatment section, S-200/2 catalytic reforming section of the crude distillation unit, the delayed coking and coke calcination unit of the black oil processing facility.

The refinery is currently operating in the routine mode. All the activities performed will allow to maintain industrial safety at the target level, retain the quality of the products, and comply with the environmental requirements.

Mangistaumunaigas Donates Three Mobile ICUs to the City of Aktau

Fri, 19 Jun 2020 11:22:16 +0500

On 18 June, the JSC “Mangistaumunaigas” management handed over the keys of 3 new mobile intensive care units (ICUs) to the first-aid station of the city of Aktau. This support to the health workers was offered at the request of JSC NC "KazMunayGas” as part of the COVID-19 pandemic control activities. The special operation vehicles fully equipped with all that is required for emergency care can take patients to the city clinics without delay.

The oil company has also helped other medical institutions by giving them 20 lung ventilation apparatuses. The lung ventilators have been delivered to the Mangistau regional hospital, the regional and city perinatal centres, the regional children’s hospital, the infectious diseases hospital, and to district clinics of the region.

The total value of the donation offered by the company to the health authorities exceeds 818 million tenges.

In view of today’s challenging epidemiological situation, each special vehicle and lung ventilator counts. The new medical equipment has therefore become a substantive support to the public health care system of Mangistau region.

The KMG Group renders regular social and charitable assistance to the regions where it operates. Mobile ICUs and lung ventilation apparatuses represent another socially important project and the company’s contribution to strengthening of the material and technical resources of the public health system to ensure that the regional communities have high-quality medical care.

It should also be noted that JSC “Mangistaumunaigas” has been providing the medical personnel of infectious diseases and provisional centres with hot meals three times a day since this March. Besides, three daily meals had also been provided to policemen and patrol officers before severe quarantine restrictions were lifted.

JSC NC KazMunayGas needs to obtain the creditors’ approvals to divest JSC KazTransGas

Fri, 05 Jun 2020 11:17:18 +0500

Mr. Alik Aidarbaev, the Chairman of the Management Board of JSC National Company KazMunayGas (“KMG” or “Company”), proposed moving JSC KazTransGas (“KTG”) directly under SWF Samruk-Kazyna management. This was proposed at a regular meeting of the Management Council of Samruk-Kazyna chaired by Nursultan Nazarbayev, the First President of the Republic of Kazakhstan.

During his speech, the CEO of KMG highlighted that the robust oil and gas transportation infrastructure was developed in Kazakhstan over the years of its independence.

“During the period of infrastructure development, the presence of these companies in KMG was fully justified. It was necessary to centralize all resources to develop a diversified network of transportation routes. To date, all these works are almost completed and the two companies have already become self-sufficient. In this regard, it is proposed moving KTG directly under Samruk-Kazyna management at the initial stage. This will reduce subholding levels, retain infrastructure projects under the State in case of IPO of KMG, and allow KMG to focus on exploration, production and oil and gas refining, and petrochemical projects,” Alik Aidarbaev stated.

The proposal was supported by Nursultan Nazarbayev, who instructed to work on the issue.

Currently, KMG has begun working out on the instructions related to KTG. It is necessary to obtain the appropriate consent of state bodies, as well as the approval of the Boards of Directors of Samruk-Kazyna and KMG.

Negotiations will be held with other interested parties, KMG has engagements with. KMG will have discussions with its creditors, including the Eurobonds holders, to provide clarifications on the transaction, the reasons for its execution and to obtain their consent. Decisions on the structuring of the transaction will be made taking into account the interests of all stakeholders, as well as the impact on KMG's credit ratings.

The issue on JSC KazTransOil will be considered additionally at a later stage.

JSC NC KazMunayGas announces financial results for the first quarter of 2020

Wed, 03 Jun 2020 05:08:17 +0500

Joint-stock (JSC) National Company (NC) KazMunayGas (“KMG” or “Company”), Kazakhstan's national vertically integrated oil and gas company, published its interim condensed consolidated financial statements for the first quarter of 2020, prepared in accordance with IAS 34, Interim Financial Reporting with independent auditor’s report on review of interim financial information.

Highlights for the first quarter of 2020[1]:

EBITDA[2] was down by 43.7% year-on-year to 275 bln tenge (USD 702 mln);
FCF[3] amounted to 26 bln tenge (USD 66 mln);
Net debt amounted to USD 6,185 mln, almost unchanged compared to USD 6,171 mln as at 31 December 2019.

	UoM	1Q 2020	1Q 2019	%
Dated Brent, average	$/bbl	50.10	63.13	-20.6%
Exchange rate, average	KZT/USD	391.72	378.04	3.6%
Revenue	bln tenge	1,376	1,765	-22.0%
Share in profit of JVs and associates, net	bln tenge	65	219	-70.2%
Net profit	bln tenge	70	309	-77.5%
EBITDA²	bln tenge	275	488	-43.7%
FCF³	bln tenge	26	-46	156.0%
Net Debt[4]	bln tenge	2,769	2,361[5]	17.3%

Operating results for the first quarter of 2020:

Oil and gas condensate production was stable year-on-year and amounted to 5,929 thous. tonnes;
Oil and gas transportation segment was relatively stable at 18,517 thous. tonnes of oil and 28,320 mln m³ of gas transported;
Refining volumes at Kazakh and Romanian refineries decreased by 4.9% year-on-year to 4,660 thous. tonnes.

	1Q 2020	1Q 2019	%
Oil production, thous. tonnes	5,929	5,939	-0.2%
Gas production, mln m³	2,260	2,173	4.0%
Oil transportation, thous. tonnes	18,517	19,660	-5.8%
Gas transportation, mln m³	28,320	25,881	9.4%
Oil refining, thous. tonnes	4,660	4,901	-4.9%

For more information, please see the Trading Update for the first quarter of 2020: http://ir.kmg.kz/.

Financial results for the first quarter of 2020

Revenue and other income

During the first quarter of 2020 revenue amounted to 1,376 bln tenge (USD 3,513 mln), down by 22.0% year-on-year largely due to a 19.7% decline in average Brent price and the decrease in KMG International’s (KMG I) crude oil sales volume, which was slightly offset by higher gas exports and Tenge devaluation against the US Dollar. Crude oil and oil products sales of KMG I decreased by 44.1% and 30.5% year-on-year to 236 bln tenge (USD 602 mln) and 267 bln tenge (USD 681 mln), respectively. Gas export revenues increased by 15.3% and amounted to 206 bln tenge (USD 527 mln) on the back of increase in export volumes.

The earnings from shares in the net profit of joint ventures and associates was down by 70.2% year-on-year to 65 bln tenge (USD 167 mln), mainly due to lower earnings from shares in profit of Tengizchevroil LLP (TCO), JSC Mangistaumunaygas (MMG), Asian Gas Pipeline LLP (AGP), Beyneu-Shymkent Gas Pipeline (BSGP) and KazRosGas LLP. With oil prices declining by 19.7% year-on-year, the earnings from shares in profit of TCO and MMG declined by 39.5% and 73.7% year-on-year to 64 bln tenge (USD 163 mln) and 6 bln tenge (USD 16 mln), respectively. The shares in profit of AGP, BSGP, and KazRosGas decreased due to the recognition of foreign exchange losses due to Tenge weakening against US Dollar by around 13.7%.

Costs and other expenses

The cost of purchased oil, gas, petroleum products and refining costs amounted to 741 bln tenge (USD 1,893 mln), reflecting a decrease of 30.5% year-on-year due to lower cost of purchased crude oil and lower global oil prices partially offset by an increase in gas purchase volumes and Tenge weakening against US Dollar. Crude oil purchases decreased by 33.8% year-on-year to 407 bln tenge (USD 1,038 mln). The cost of oil for refining declined by 45.5% year-on-year and amounted to 123 bln tenge (USD 315 mln). KaztransGas’s (KTG) cost of purchased gas increased by 9.4% year-on-year to 140 bln tenge (USD 359 mln).

During the first quarter of 2020, on the back of the revised price assumptions used in value-in-use impairment testing, KMG recognized the impairment charges for JSC Embamunaigas’s fixed assets in the amount of 60 bln tenge (USD 154 mln), as well as the impairment of investments in joint ventures and associates such as Ural Group Limited and PetroKazakhstan Inc. in the amount of 20 bln tenge (USD 51 mln) and 18 bln tenge (USD 46 mln), respectively.

Production expenses increased by 7.1% year-on-year to 174 bln tenge (USD 445 mln).

Taxes other than income tax were down by 20.5% year-on-year and amounted to 94 bln tenge (USD 241 mln) mainly due to decrease in rent and mineral extraction taxes as a result of lower oil prices.

Finance costs were down by 21.5% year-on-year and amounted to 67 bln tenge (USD 171 mln) mainly due to early fulfillment of obligations under the TCO crude oil prepayment agreement in the later part of 2019.

Net profit

Net profit decreased by 77.5% year-on-year to 70 bln tenge (USD 177 mln) as a result of lower oil prices and recognition of asset impairments, which was partially offset by decrease in cost of sales, taxes other than income tax and recognition of foreign exchange gain as a result of Tenge weakening against US Dollar.

Taxes and other obligatory payments amounted to 281 bln tenge (USD 718 mln), reflecting a decrease of 24.3% year-on-year.

Debt load

Gross debt as of 31 March 2020 increased by 15.5% to 4,433 bln tenge (USD 9,901 mln) compared to 31 December 2019. Gross debt including guaranteed obligations as of 31 March 2020 amounted to 4,725 bln tenge (USD 10,554 mln), reflecting an increase by 15.2% compared to 31 December 2019 (decrease by 1.5% in US Dollar terms). The increase of gross debt by 469 bln tenge was mainly attributable to the effect of Tenge weakening against US Dollar on USD denominated bonds and loans. However, gross debt in US Dollar terms was down by 1.3% to USD 9,901 mln compared to USD 10,030 mln as at 31 December 2019. In January 2020, Atyrau refinery (ANPZ) received long-term loan from DBK in the amount of 46 bln tenge (USD 121 mln) to refinance US Dollar denominated loan from the Export-Import Bank of China (Eximbank), which was obtained to fund new oil refining facilities, and made an early partial repayment in the amount of USD 110 mln (42 bln tenge).

Cash and cash equivalents as of 31 March 2020 including cash in deposits increased by 12.7% to 1,664 bln tenge (USD 3,716 mln) compared to 1,476 bln tenge (USD 3,859 mln) as of 31 December 2019 mainly due to the effect of Tenge depreciation against US Dollar by around 13.7%. Cash and cash equivalents in US Dollar terms decreased slightly to USD 3,716 mln compared to USD 3,869 mln as of 31 December 2019.

As a result of the above, KMG’s net debt as of 31 March 2020 amounted to 2,769 bln tenge (USD 6,185 mln) reflecting an increase of 17.3% compared to 31 December 2019 (increase by 0.2% in US Dollar terms).

Key corporate events:

On 27 March 2020, S&P Global ratings affirmed its "BB" rating and revised its outlook on KMG from “stable” to "negative" on the back of lower oil prices;
On 27 March 2020, Fitch affirmed its rating at the level “BBB-” with a Stable Outlook;
In April-May 2020, KTG made a partial redemption of its guaranteed bonds due in 2027 for the early repayment in the amount of USD 43.38 mln.

[1] Amounts shown in US Dollars throughout the press-release were converted solely for the convenience of the reader at the average exchange rate for the applicable period for amounts taken from the consolidated statement of income and consolidated statement of cash flows and the period-end rates for amounts taken from the consolidated balance sheet (average exchange rates for the first quarter of 2020 and 2019 were 391.72 and 378.04 KZT/USD, respectively; period-end exchange rates as at 31 March 2020 and 31 December 2019 were 447.67 and 382.59 KZT/USD, respectively.

[2] Starting from 2019, the Company revised the calculation approach of Earnings before interest, taxes, depreciation and amortization (EBITDA), excluding the finance income from the methodology. In the reports for 2019, and for further periods, the Company calculates EBITDA as “Revenue + Share in profit of JVs and associates, net – Cost of purchased oil, gas, petroleum products and other materials – Production expenses - G&A expenses – Transportation and selling expenses – Taxes other than income tax. Financial metrics for prior periods were recalculated respectively.

[3] Starting from 2019, the Company revised the calculation approach of the Free cash flow (FCF), including proceeds from the loan previously provided to Caspian Pipeline Consortium. The Company calculates FCF as “CFO - TCO prepayments, net – Capex (cash basis) + Proceeds from the loan previously provided to Caspian Pipeline Consortium”. FCF metrics for prior periods were recalculated respectively.

[4] Net Debt figures as of 31 March 2020 do not include guaranteed obligations on a syndicated loan of Beineu-Shymkent Gas Pipeline (BSGP) in the amount of 290 bln tenge (USD 648 mln), guaranteed obligation on a loan of JSC “AstanaGas KMG” in the amount of 1.9 bln tenge (USD 4.2 mln), lease liabilities in the amount of 52 bln tenge (USD 116 mln); and Net Debt figures as of 31 December 2019 do not include guaranteed obligations on a syndicated loan of BSGP in the amount of 262 bln tenge (USD 684 mln), guaranteed obligation on a loan of JSC “AstanaGas KMG” in the amount of 1.9 bln tenge (USD 4.9 mln) and lease liabilities in the amount of 47 bln tenge (USD 123 mln).

[5] Net debt as of December 31, 2019.

Alik Aidarbayev: “We Are Not Going to Cut Operations Personnel”

Tue, 02 Jun 2020 10:56:07 +0500

Alik Aidarbayev, Chairman of the Management Board of JSC NC “KazMunayGas” (KMG, the Company), made a working visit to Atyrau and Mangistau regions.

In the course of the visit, he met with the heads of the two regions. Mr. Aidarbayev discussed the COVID-19 situation at Tengiz field with Makhambet Dosmukhambetov, Akim of Atyrau region, and reviewed the organisation of rotations at the Company’s producing enterprises with Serikbai Trumov, Akim of Mangistau region.

During his working trip, KMG CEO also held a meeting attended by the heads of subsidiaries, service companies and chairpersons of trade union organisations. In his speeches, Mr. Aidarbayev noted that, as a result of the epidemiological response measures, the situation at the fields was stable. However, he emphasized that preventive measures at production sites must be strictly complied with.

“We should continue our efforts to prevent the spread of coronavirus, and strictly comply with the preventive measures. This is the responsibility of the executives at all levels,” Mr. Aidarbayev said.

The KMG CEO enlarged on the Company’s financial position. An anti-crisis program concept has been developed to reduce the negative impact of the market conditions on KazMunayGas.

“The situation is very serious. Therefore, we should take proper measures to stay afloat. We have developed an anti-crisis program concept aimed at stabilising the financial position, bringing costs in compliance with reduced profits, and getting prepared for post-crisis development,” the KMG CEO said.

In furtherance of the anti-crisis measures, costs have been cut by 146 billion tenge throughout the group of companies. The organisational structure of the headquarters has been revised, and the staff has been cut by 34%. The salaries of top managers have been reduced by 30%, those of mid-level managers — by 20%, and all bonuses have been cancelled until the year end. The salaries of ordinary staff members have remained intact. The headquarters has stopped using company cars for the management.

“As for the subsidiaries, all costs not affecting the operations and employment have been cut. We will continue cost-cutting depending on the situation. However, we are not going to cut operations personnel. Saving jobs is our key principle. I am confident we will overcome all difficulties by joint efforts,” Mr. Aidarbayev added.

In his address to the heads of subsidiaries, the Chairman of the Management Board of JSC NC “KazMunayGas” discussed how the falling demand for energy resources and the drop in oil prices would affect the Company. According to him, KMG is to face a significant decline in its financial performance for the year. In addition, the Company is cutting production under the OPEC+ agreement, which will eventually lower respective contractor work scopes.

“Therefore, the heads of subsidiaries and service companies should efficiently distribute the remaining work scopes until the year end. Work schedules are very likely to be changed. We still have to address this issue in more detail at the local level. But I would like to underline once again that all the jobs of the operations personnel should be preserved,” the KMG CEO said.

During his visit to Atyrau region, Mr. Aidarbayev also checked out the progress of construction of the integrated gas chemical facility. The current progress of the project is 66%. General construction works are at the completion stage; assembly of tanks and vessels, heat-exchange equipment, metal structures and pipelines is underway. Assembly, mounting and pipes fitting works for complex process equipment are planned for the period ahead. The KMG CEO also visited the sea port of Atyrau where he had a look at the process of sea delivery of critical oversize process equipment manufactured in South Korea.

JSC NC “KazMunayGas” will pay KZT 81.7 billion of dividends to shareholders for 2019

Thu, 28 May 2020 03:05:20 +0500

On 22 May 2020, the Board of Directors of JSC NC “KazMunayGas” (hereinafter – KMG, the Company) approved the payment of dividends based on the 2019 performance in the amount of KZT 81.7 billion, which is approximately twice as much as a year earlier.

The decision to pay dividends was made in accordance with the dividend policy and endorsed by the Company’s principal shareholder taking into account the instructions of the Head of State. Additionally, the Board of Directors took into consideration the current financial standing of KMG, the cash flow forecast, the impact on international credit ratings, the ongoing job preservation efforts, and planned investments made in the interests of the state.

According to the audited financial statements for 2019, in addition to dividends paid, KMG directed KZT 20 billion to shareholders, including funds for the construction of social facilities in the cities of Nur-Sultan and Turkestan.

It should be noted that the Company also uses proceeds from its activities to service external liabilities, the repayment amount of which in 2019 was about KZT 997 billion ($2.6 billion).

KazMunayGas Cuts Top Managers’ Salaries and Cancels Bonuses

Mon, 18 May 2020 04:48:53 +0500

On 18 May 2020, Dauletzhan Khassanov, HR Managing Director of JSC NC “KazMunayGas” (KMG, the Company), gave a briefing at the venue of the Central Communications Service under the President of the Republic of Kazakhstan. The briefing was devoted to the HR policy as part of implementation of the anti-crisis strategy.

The speaker began by saying that profits in the first quarter fell three times against the same period of the previous year, and some subsidiaries recorded losses. In order to stabilise the financial position and to reduce the negative market impact, KazMunayGas is developing an anti-crisis strategy that will enable the Company to minimize losses and create conditions for a high start in the post-crisis period.

In particular, the Company is streamlining its business processes and reviewing the implementation plans for many projects and activities, which are losing relevance in the crisis situation.

As Dauletzhan Khassanov said, optimisation has primarily affected the remuneration of the management. On 12 May, a new system of official salaries was approved. The system provides for a 30% reduction in the salaries of the Chairman and Deputy Chairmen. Some management jobs will be made redundant, and the employees will be appointed to lower-level positions, with a resultant reduction in the salaries of the mid-level executives by up to 20%. The wages of ordinary employees will remain intact.

Thus, taking into account the cancellation of bonuses in 2020, the KMG central administration executives will lose more than 50% of their earnings.

In addition, as was announced earlier, KMG is reducing the number of central administration staff in the framework of the anti-crisis strategy by 34%, from 729 to 480. The relevant decision was made by the Board of Directors on 29 April 2020.

According to Dauletzhan Khassanov, 90% of the people who are made redundant will quit KazMunayGas. Given the current situation in the labour market, a socially responsible lay-off program has been developed at the request of the Samruk-Kazyna Fund. The program includes a compensation package and an outplacement plan.

The compensation package consists of:

a one-time payment in the amount of three monthly salaries;
six-month financial support to compensate for loss of income;
the right to use medical insurance services at the expense of the Company until February 2020.

The outplacement plan at KMG provides for various activities with the participation of career advisers. Such advisers will help the employees analyse their advantages and the situation in the labour market, and to work out individual development plans. They will also advise how to behave during interviews, make a correct CV, etc. Group trainings will be arranged for the employees as well. Taken as a whole, such measures are expected to offer them better employment chances in the future.

“Although this is a generally accepted world practice, we can say that KazMunayGas is the first Kazakhstan company to implement such a program of support for its former employees. We understand very well that workforce restructuring is always painful and hard. In such a situation, some people may be at a loss and not know what to do. Our task is to help them,” Dauletzhan Khassanov said.

NC KazMunayGas JSC published Annual Report for 2019

Thu, 30 Apr 2020 12:36:33 +0500

The Annual Report describes key performance, milestone corporate events as well as consolidated business operating and financial results of NC KazMunayGas JSC Group for 2019.

The Annual Report is available at the following link

Central Office New Organizational Chart Approved by KMG Board of Directors

Thu, 30 Apr 2020 11:51:40 +0500

The Board of Directors of KazMunayGas (KMG) approved the new organizational chart during the meeting held on 29 April 2020. The resolution was approved as part of the action plan to balance the company's financial standing and mitigate the adverse effect of market factors.

The new KMG Central Office organizational chart provides:

integration of Geology, Exploration and Production offices. The position of Chief Geology and Exploration Officer is, therefore, cancelled;
minimization of management levels, which implies elimination of 22 managing directors;
three-time reduction of the departments.

"We should have a lean Corporate Center structure capable to respond quickly and make effective decisions to overcome the crisis consequences with minimum losses for the business. We will give up many functions and review the algorithm of interaction with the subsidiaries to focus on the anti-crisis strategy activities", KMG CEO Alik Aidarbayev said.

KMG specialists now enhance its business processes and review a large number of project and activity plans as many of them are out of date because of the crisis. In this light, a decision was made to reduce the headcount of the central office by 34% from 729 to 480 people.

KMG management, understanding its social responsibility before the employees and their families, intends to provide maximum assistance to the terminated employees. This assistance includes the following options at the choice of the terminated employees: payment of a one-time allowance, services of the recruitment agencies or retraining to paid by KMG. These assistance measures of socially responsible employment termination have been prepared as part of Samruk-Kazyna instruction.

JSC NC KazMunayGas 1Q 2020 Trading Update

Wed, 29 Apr 2020 04:09:15 +0500

Joint-stock (JSC) National Company (NC) KazMunayGas
(“KMG” or “Company”), Kazakhstan's national vertically integrated oil and gas company, announces its operating results for the first quarter of 2020.

Highlights for the first quarter of 2020:

Oil and gas condensate production was stable year-on-year and amounted to 5,929 thous. tonnes;
Oil and gas transportation segment was relatively stable at 18,517 thous. tonnes of oil and 28,320 mln m³ of gas transported;
Refining volumes at Kazakh and Romanian refineries decreased by 4.9% year-on-year to 4,660 thous. tonnes.

	1Q 2020	1Q 2019	%
Oil production, thous. tonnes	5,929	5,939	-0.2%
Gas production, mln m³	2,260	2,173	4.0%
Oil transportation, thous. tonnes	18,517	19,660	-5.8%
Gas transportation, mln m³	28,320	25,881	9.4%
Oil refining, thous. tonnes	4,660	4,901	-4.9%

Alik Aidarbayev, CEO, comments:

“The COVID-19 pandemic has brought unprecedented challenges both for people of many countries, health systems and global economy as a whole. Our thoughts and thankfulness with the health, police and other workers who are the frontline soldiers against COVID-19.

KMG plays a key role in the national economy and as a provider of energy to industry, ensures the continuity of the production processes. Despite the current health crisis, KMG has not halted any production activities at its facilities. However, declining demand for oil caused by COVID-19 and recent OPEC+ agreement to collectively cut oil production where Kazakhstan committed to reduce crude production by 390 thous. bbl/d, may require restricting KMG production during the second quarter of 2020. KMG jointly with the Ministry of Energy are working on the scenarios and all measures will be carefully worked out by the Company and its stakeholders.

While we all grapple with the impact of COVID-19, KMG is focused on health and safety of employees and their families, and navigating the challenges during these unprecedented times to the best of our ability.”

Upstream

In the first quarter of 2020, KMG’s oil and gas condensate production amounted to 5,929 thous. tonnes (489 kbopd), almost unchanged year-on-year. Natural and associated gas production increased by 4.0% year-on-year to 2,260 mln m³.

KMG's share in oil production, and natural and associated gas production at mega projects (Tengiz, Kashagan, and Karachaganak) increased by 4.6% and 5.9% year-on-year, and amounted to 2,184 thous. tonnes (191 kbopd) and 1,597 mln m³, respectively.

KMG’s share in oil and gas production at Tengiz increased by 0.9% year-on -year and amounted to 1,535 thous. tonnes (135 kbopd) and 841 mln m³, respectively. The global pandemic did not affect operations at Tengiz in the first quarter of 2020, but several employees of TCO’s contractor were infected with COVID-19 in mid-April. To avoid further personnel infection, TCO has developed a safety plan for Tengiz that considers construction postponement at base production units, gradual suspension of non-critical work related to the Future Growth Project and a decrease of the number of personnel in the Tengiz field.

KMG's share in oil production at Kashagan increased by 23.0% year-on -year to 365 thous. tonnes (32 kbopd). Natural and associated gas production increased by 25.2% year-on-year and amounted to 219 mln m³. The growth of oil and gas production is attributable to higher gas injection given the transfer of two wells to the injection fund, as well as the improvement of the utilization ratio at the production facilities. In the first quarter of 2020, the average gross daily production at Kashagan amounted to 384 kbopd.

KMG’s share in oil production at Karachaganak increased by 5.2% year-on-year and amounted to 285 thous. tonnes (25 kbopd). Gas production amounted to 538 mln m³, up by 8.1% year-on-year. The growth of oil and gas production is associated with stable gas acceptance by Orenburg Gas Processing Plant and the planned preventive maintenance of the facilities of the Karachaganak Processing Complex (KPC) and gas-processing units (Unit 2 and Unit 3) in September-October 2019.

Oil and gas production at KMG-operated assets decreased by 2.8% year-on-year and amounted to 3,744 thous. tonnes (298 kbopd) and 663 mln m³, respectively. The decrease in production volumes at KMG-operated assets was mainly attributable to the natural decline in production levels at JV Kazgermunai LLP and JSC PetroKazakhstan Inc. by 28.4% and 22.3%, respectively, in line with the production plan.

Midstream

In the first quarter of 2020, oil transportation decreased by 5.8% year-on-year and amounted to 18,517 thous. tonnes (net to KMG[1]).

The volume of oil transportation through the trunk pipelines decreased by 3.8% year-on-year and amounted to 16,158 thous. tonnes (net to KMG). Slight decrease is explained by the limited oil supply from CNPC Aktobemunaigas JSC and the decrease in oil supply from oil companies operating the Kumkol group of fields. The decrease was partially offset by an increase in the transportation volume of the Caspian Pipeline Consortium (CPC) by 4.7% year-on-year to 3,514 thous. tonnes (net to KMG).

Offshore oil transportation decreased by 17.4% year-on-year to 2,359 thous. tonnes. The decrease is majorly attributable to lower dispatch volumes in the Mediterranean Sea and lower shipments in Aktau – Makhachkala direction.

In the first quarter of 2020, gas transportation through KMG’s gas pipelines increased by 9.4% year-on-year to 28,320 mln m³. The growth is mainly attributable to carrying out gas transit from Turkmenistan, higher transit volumes of Russian gas from PJSC Gazprom and higher gas transit from Uzbekistan.

In the first quarter of 2020, gas sales increased by 7.8% year-on-year to 7,802 mln m³. Exports of sales gas amounted to 2,565 mln m³, of which 76% was exported to China under the agreement dated in October 2018 on the supply of natural gas to China in the amount of up to 10 bln m³. Because of the pandemic in the first quarter of 2020, gas exports to China were below the planned volumes, but 10% higher year-on-year.

Trading

The sales volume of KMG's own produced oil and gas condensate increased slightly in the first quarter of 2020 year-on-year and amounted to 5,922 thous. tonnes, of which 69% was exported.

In the first quarter of 2020, domestic supply of own produced oil and gas condensate amounted to 1,826 thous. tonnes, including the crude oil supply from KMG-operated assets (JSC OzenMunayGas, JSC EmbaMunayGas, and Kazakhturkmunay LLP) in the amount of 1,011 thous. tonnes to Atyrau and Pavlodar refineries for further oil refining and sale of oil products.

Downstream

The global pandemic did not significantly affect KMG's refining sector in the first quarter of 2020. However, quarantine measures in Kazakhstan’s major cities have resulted in a decrease in energy consumption, and has had an adverse effect on the refineries’ operations. Refineries continue to operate; however, to avoid oversupply, both Pavlodar and Shymkent refineries are operating at minimal balanced capacity. Starting from mid-March, Kazakhstani refineries’ production has been reduced by around 13%.

In the first quarter of 2020, decrease in Romanian refining volumes by 17.7% was partially offset by an increase at Kazakh refineries, reflecting slight downtrend in overall refining volumes to 4,660 thous. tonnes:

Refining volumes of Kazakh refineries (net to KMG) slightly increased and amounted to 3,348 thous. tonnes. The growth was at Atyrau refinery to balance production of oil products in the country due to declining volumes at Pavlodar and Shymkent refineries. A slight decrease at Pavlodar and Shymkent refineries was observed on the back of oil quality issues at CNPC AktobeMunaiGas in January and quarantine measures in Kazakhstan’s major cities, leading to lower oil products consumption;
Refining at KMG International refineries (Petromidia, Vega) decreased by 17.7% year-on-year to 1,312 thous. tonnes as a result of a production shutdown at Petromidia refinery related to scheduled overhaul from March 13 to April 30, 2020.

In the first quarter of 2020, production of oil products at Kazakh and Romanian refineries decreased by 8.0% year-on-year to 4,231 thous. tonnes:

Production of oil products at Kazakh refineries (net to KMG) decreased by 2.8% year-on-year to 2,954 thous. tonnes mainly due to refusal of the CNPC AktobeMunaiGas oil for quality issues in January and quarantine measures in Kazakhstan’s major cities;
Oil products production at KMG International refineries (Petromidia, Vega) in Romania decreased by 18.1% year-on-year to 1,276 thous. tonnes as a result of production shutdown at Petromidia refinery due to scheduled overhaul.

As throughout the energy sector, it is not appropriate in present circumstances to offer an outlook, or give forecasts. However, the Company is closely monitoring developments, and has contingency plans and the full range of reaction scenarios to the unprecedented changes in demand, which will affect the second quarter of 2020 results. The Company will inform stakeholders about new circumstances or measures taken, as appropriate.

[1] Oil transportation volume takes into account the transportation volume of each pipeline company, including the operating share of KMG. Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation.

Coronavirus Leads to Declining Demand for Oil Products in Kazakhstan

Thu, 16 Apr 2020 09:59:50 +0500

JSC NC “KazmunayGas” (hereinafter KMG) hereby informs that implementation of a lockdown in large Kazakh cities and declining demand for oil products are making refineries operate at minimum balanced capacities. Crude oil in Kazakhstan is refined at four enterprises: Atyrau Refinery, Pavlodar Petrochemical Plant, PetroKazakhstan Oil Products (Shymkent Refinery), and CASPI BITUM bitumen plant.

Analysis of requests received by refineries from crude oil suppliers shows a significant decline in the demand for core oil products in April 2020: 40% for motor gasoline and diesel fuel, and 70% for jet fuel. Crude oil refining and production output at Atyrau, Pavlodar and Shymkent Refineries have been reduced to the minimum level in order to avoid overstock.

Refinery operations are continuing.

Reinforced Security Measures

Crisis management headquarters have been operating in refineries since 15 March due to the COVID-19 pandemic. They coordinate their activities with the national company’s central HQ on a daily basis.

Unprecedented preventive measures have been taken - more stringent sanitary, disinfectant, and access control procedures introduced; up to 70% of the administrative personnel working remotely; movement of refinery employees between business units limited; health monitoring performed daily; continuous disinfection of premises, vehicles and adjoining territories carried out.

KMG supplies the refineries with at least a two-month stock of water, food, essential commodities, medicines, and personal protection equipment. The employees are provided with such personal protection equipment as medical face masks, nitril gloves, and bactericides.

Modernization Results

It is worth reminding that modernization of three refineries (Atyrau, Pavlodar and Shymkent) allowed for covering all the internal market needs for oil products. The refining potential of the refineries was increased to 17.5 million tons a year, and the oil conversion ratio raised to 90%. Today, the Kazakh people have enough gasolines of K4 and K5 emission class (Euro-4 and Euro-5, respectively). In 2019, excess gasoline was exported to foreign and CIS states.

The crude hydrocarbons processing in Kazakhstan (including KMG) in 2019 amounted to 13,822,000 tons - a 3% rise against 2018.

The refinery run in 2019, including KMG’s operating results, made up 12,513,000 tons, which is 361,000 tons (3%) more than in 2018.

Epidemiological situation in KMG Group

Thu, 02 Apr 2020 04:40:24 +0500

In view of the emergency state and understanding its responsibility before the employees and all stakeholders, as well as in compliance with the principles of openness and transparency, KazMunayGas (hereinafter — KMG, the Company) is informing about the coronavirus situation in KMG Group.

The Company consistently takes a number of preventive measures. An Emergency Response Team has been initiated to monitor the situation, so prompt measures to protect the KMG Group employees have been taken. The subsidiaries have strict preventive measures in operation, including transition of some employees at high risk to work from home, remote work schedules, demobilization of personnel, where their functions are not so critical, from production sites, offices and projects.

We are also informing that on 2 April 2020 the test results of the Atyrau Goods and Services Quality and Safety Control Office confirmed that an Atyrau Refinery employee has the coronavirus infection (COVID-19).

On Saturday evening, 28 March 2020, out of working hours, our employee contacted a person, who on 29 March 2020 informed of a possible infection as a result of a contact with another infected person. From 29 March 2020, our colleague was isolated as prescribed by the existing rules. On 1 April 2020, after the coronavirus infection of the contact person was confirmed, the Atyrau Refinery employee was tested, and today the result is ready.

KMG specifically notes that the Atyrau Refinery employee had no direct contact with his colleagues and last visited his working place on 28 March 2020 during the working hours.

The Atyrau Refinery management is investigating potential contacts, keeping in touch with competent authorities, and together with the sanitary and epidemiological service started the regional sanitary and epidemiological activities.

Currently, the Atyrau Refinery is normally operating; refinery and shipment operations comply with the approved production plans.

We emphasize that the Company’s main values and priority are our employees’ lives and health, occupational safety, as well as smooth and continuous operation process.

The management and staff of KazMunayGas National Company wish our colleague to get well soon.

KazMunayGas ranks first in the Environmental Transparency Rating

Fri, 27 Mar 2020 06:13:55 +0500

KazMunayGas NC (hereinafter — KMG, the Company) took the first place in the Eurasian Environmental Transparency Rating of Oil and Gas Companies. The 2019 rating included 14 oil and gas companies in Kazakhstan with the volume of hydrocarbon production of more than half a million tons as reported by the Ministry of Energy of the Republic of Kazakhstan.

The objective of rating is to promote the rational use of hydrocarbon resources, protect environment and run socially responsible business.

KMG once again confirmed the title of the most environmentally friendly and responsible company in Kazakhstan. It topped the Environmental Transparency Rating for the third year in a row. The company continues its environmental responsibility path, develops the environmental management system, and cooperates with all its stakeholders. The company annually publishes information on all environmental aspects in the Annual Report, Sustainable Development Report, as well as updated information is posted on the official website of the company.

In addition, a separate research was made among 17 KMG subsidiaries (at least a 50% interest). The rating included not only upstream operations, but also refinery and transportation companies. The first place was taken by JSC Intergas Central Asia. It should be noted that the rating among subsidiaries and affiliates is a voluntary initiative of KMG. Its purpose is to increase environmental transparency and “internal competition” of subsidiaries.

The study was initiated by the Russian World Wide Fund for Nature (WWF) and CREON group in partnership with the United Nations Environment Program (UNEP), CREON Capital and the National Rating Agency (NRA) of the Russian Federation. This year, the rating expanded its coverage and became “Eurasian” as comprised companies from Kazakhstan, Russia and Azerbaijan. At the next stage, it is planned to include Uzbekistan and Turkmenistan.

Click here to see rating results.

Alik Aidarbayev, KazMunayGas Chief Executive Officer, held anemergency response meeting

Wed, 25 Mar 2020 06:11:53 +0500

In view of the emergency state and understanding its responsibility beforeits employees and all stakeholders, as well as in compliance with the principles of openness and transparency KazMunayGas NC (hereinafter — KMG, the Company) is notifying about the measures taken by the Company to prevent the spread of coronavirus infection.

On 23 March, a regular meeting of the KMG Emergency Response chaired by Alik Aidarbayev was held.

During the meeting, KMG CEO instructed all subsidiaries and affiliates to enhance the sanitary and epidemiological control so as to prevent the spread of coronavirus infection. We should recall that earlier the Company already approved an Activity Plan to ensure maximum safety of KMG Group employees.

In addition, an instruction was given at the emergency response meeting to inform the entiresubsidiaries and affiliates operation staff about the measures taken by the government to support people under emergency conditions. In order to prevent food gaps at production sites, aninstruction was given to take special control over foodstuffs accounting and procurement.

“Aswe give jobs to tens of thousands employees and contribute to the industry economic development, we were among the first to support these measures and set three priorities. First, we care about our employees and their families. KazMunayGas Group employees and contractors should always be safe and sound, when they leave fromwork. The second is smooth and trouble-freeoperations and industrial safety. The third is full cooperation with government authorities and akimats in terms of proper response, information communication and coordination of efforts to prevent the spread of coronavirus infection,” A. Aidarbayev noted.

Currently, 32 KMG Group employees are in quarantine, of them 2 are under supervision at hospitals in Atyrau and Pavlodar, the other 30 employees are in quarantine at home in Nur-Sultan, Almaty, Aktau, Aktobe, Atyrau, Pavlodar and Shymkent. All these employees arrived from foreign countries and on arrival to Kazakhstan were immediately isolated.

We also inform that 8 KMG employees (2 employees of the central office of JSC NC “KazMunayGas” and 6 employees of subsidiaries) were isolated for two weeks and are released from quarantine now, the test was negative.

KMG employees have no proven coronavirus infection as of 24 March 2020.

All the subsidiaries daily report their data to the Emergency Response on COVID-19 and ongoing preventive measures.

Message of KazMunayGas Chief Executive Officer A. Aidarbayev to employees

Fri, 20 Mar 2020 05:58:14 +0500

Dear colleagues!

I would like to wish you a happy spring holiday Nauryz! Nauryz marks the beginning of a new year, new endeavours, it is first of all a celebration of goodness and creation, love and harmony. I wish a special warmth, cosiness and hospitality air in every house.

These holidays, our country, just like the whole world, faced an unknown challenge our generation has never seen before — the pandemic of coronavirus infection. All continents, countries and peoples are equal in the face of the virus. The situation is compounded by a significant decline in oil prices and instability in international financial markets.

The Government of Kazakhstan takes unprecedented and drastic actions to prevent the spread of infection. Sure these measures are timely and necessary. “As we give jobs to tens of thousands employees and contribute to the industry economic development, we were among the first to support these measures and set three priorities:

First, we care about our employees and their families. KazMunayGas Group employees and contractors should always be safe and sound, when they leave from work.

The second is smooth and trouble-free operations and industrial safety.

The third is full cooperation with government authorities and akimats in terms of proper response, information communication and coordination of efforts to prevent the spread of coronavirus infection.

In this view, I signed orders and gave instructions to all subsidiaries and affiliates CEOs to enhance preventive measures. Crisis Management Emergency Response Teams started their work across the Group, and an action planwasworked out to respond to the coronavirus outbreak. All the production sites are to be provided with resources for their smoothoperations, the procurement of goods, works and services is under strict control, coordination with all contractors and service companies was enhanced.

In this challenging time for our country, I want to encourage you, my colleagues and your loved ones, to show maximum consciousness, patience and understanding. I strongly urge each of you to comply with all requirements of our Government, carefully monitor your health status and strictly follow preventive recommendations.

The company will do its best for your safety. For my part, I also believe that each of you will take responsibility for your safety, safety of your family, our company and country.

I am sure together we will overcome these challenges and become stronger.

Take care of yourself and your loved ones!

Alik Aidarbayev
Nur-Sultan, 20 March 2020

Coronavirus Prevention Activities KazMunayGas Takes

Mon, 16 Mar 2020 08:25:41 +0500

KazMunayGas (hereinafter - KMG, the Company), in view of emergency status and understanding its responsibility before the employees and all stakeholders, as well as in compliance with the principles of openness and transparency, is notifying about measures taken by the Company to prevent the coronavirus infection contagion.

First, we find essential to inform the public that two employees of the Company’s central office were suspected to have a coronavirus infection. The fact is that one of the employees shared the same flight from Frankfurt to Nur-Sultan with a coronavirus infected person. Another employee boarded the same plane in Nur-Sultan to get to Almaty. Both employees were COVID-19 tested as prescribed, and the analysis proved the negative results. According to the Decree on additional measures to prevent coronavirus infection contagion in the Republic of Kazakhstan under the hand of Top Sanitary Official Zhandarbek Bekshin, our two employees are in the “Potential Contacts” class and are now under home quarantine.

We are notifying as well that the Company has taken unprecedented actions to ensure the maximum safety of KMG Group employees:

offices and production premises are timely disinfected and treated as required. Employee personal hygiene awareness-raising activities are regularly taken;
all business trips abroad as well as throughout Kazakhstan are cancelled in KMG Group;
all public events are cancelled;
all required disinfection activities in overcrowded operational sites are taken and employees’ temperatures are regularly taken;
at least 50% of administrative employees are transferred to remote work from home;
special emergency response teams are created both in the central office and subsidiaries.

We should note that the employee safety along with smooth operations are of priority for KMG.

No coronavirus was shown among employees as of 16 March 2020. All KMG entities are in normal operation mode.

Besides, we are informing that the plants normally operate their oil and gas production, as well as transportation and refining, we have no deficiency of oil products.

The Company will timely inform the public about any actualities in the relevant matter.

JSC NC KazMunayGas announces 2019 FY financial results

Thu, 12 Mar 2020 06:46:00 +0500

Nur-Sultan, 12 March 2020 – Joint-stock (JSC) National Company (NC) KazMunayGas (“KMG” or “Company”), Kazakhstan's national vertically integrated oil and gas company, announces its financial results for 2019 according to International Financial Reporting Standards (IFRS).

Highlights for 2019[1]:

EBITDA[2] up 15.0% year-on-year to 1,963 bln tenge (USD 5,126 mln);
FCF[3] up 42.4% year-on-year to 592 bln tenge (USD 1,537 mln);
Net debt up 8.6% and amounted to 2,361 bln tenge (USD 6,171 mln) compared to 31 December 2018 due to cash utilization for the advance settlement under TCO crude prepayment.

	UoM	2019	2018	%
Brent dated, average	$/bbl	64.21	71.31	-10.0%
Exchange rate, average	KZT/USD	382.87	345.04	11.0%
Revenue	bln tenge	6,859	6,989	-1.9%
Share in profit of JVs and associates, net	bln tenge	828	697	18.7%
Net profit	bln tenge	1,158	694	67.0%
EBITDA²	bln tenge	1,963	1,707	15.0%
FCF³	bln tenge	592	416	42.4%
Net debt	bln tenge	2,361	2,175	8.6%

Operating results for 2019

Oil and gas condensate production stable year-on-year and amounted to 23,618 thous. tonnes or 26% of total production in Kazakhstan;
Oil and gas transportation segment relatively stable at 78,066 thous. tonnes of oil and 103,494 bln m³ of gas transported;
Domestic demand for light petroleum products fully covered and further volumes were exported to European and Central Asian markets.

	2019	2018	%
Oil production, thous. tonnes	23,618	23,606	0.1%
Gas production, mln m³	8,455	8,137	3.9%
Oil transportation, thous. tonnes	78,066	75,038	4.0%
Gas transportation, mln m³	103,494	111,567	-7.2%
Oil refining, thous. tonnes	20,588	19,715	4.4%

For further information, please see the Trading Update for 2019: http://ir.kmg.kz/

Financial results for 2019

Revenue and other income

During 2019, revenue decreased by 1.9% year-on-year to 6,859 bln tenge (USD 17,915 mln). The downtrend was mainly attributable to the decrease in average Brent prices by 10.0% and the decrease in KMG International’s (KMG I) crude oil sales volumes, which was partially offset by increased gas exports to China and tenge depreciation against US Dollar by 11.0%. The crude oil sales of KMG I decreased by 13.2% year-on-year to 1,567 bln tenge (USD 4,092 mln). Gas export increased by 22.9% and amounted to 674 bln tenge (USD 1,761 mln).

The earnings from shares in the net profit of joint ventures and associates of KMG increased by 18.7% year-on-year to 828 bln tenge (USD 2,163 mln). The increase is mainly the result of a full recovery of accumulated unrecognized shares in the loss of Asia Gas Pipeline LLP[4] to the amount of 168 bln tenge (USD 439 mln).

Finance income for 2019 increased by 49.6% year-on-year to 241 bln tenge (USD 629 mln). The increase was mainly driven by derecognition of loans from partners of the Pearls project for the total amount of 111 bln tenge (around USD 290 mln) due to the partners’ decision to voluntarily relinquish the contract area under the Pearls PSA.

Costs and expenses

The cost of purchased oil, gas, petroleum products and refining costs amounted to 3,914 bln tenge (USD 10,222 mln), reflecting a decrease of 9.3% year-on-year due to lower cost of purchased crude oil and the lower global oil prices partially offset by increase in gas purchase volumes and tenge depreciation against US Dollar. Crude oil purchases decreased by 6.1% year-on-year to 2,448 bln tenge (USD 6,395 mln). KTG’s cost of purchased gas increased by 53.3% year-on-year and amounted to 473 bln tenge (USD 1,235 mln).

Production expenses amounted to 722 bln tenge (USD 1,885 mln), reflecting an increase of 19.4% year-on-year due to increase of salary expenses, repair and maintenance and the lease expenses. Salary expenses for production employees for 2019 were up by 15.9% year-on-year and amounted to 338 bln tenge (USD 883 mln) due to the salary indexation by around 7% for the employees at KMG-operated assets and KTG. Repair and maintenance costs for 2019 amounted to 129 bln tenge (USD 338 mln), reflecting an increase of 31.5% year-on-year explained by the workover of the wells at oilfields of the JSC Ozenmunaigas and JSC Embamunaigas, scheduled overhauls at Karachaganak mega project and the service maintenance of processing equipment at the Atyrau refinery (ANPZ). Increase of the lease expenses can be explained by attraction of third-party ship-owners for providing oil transportation services in accordance with the agreement on oil transportation between Kazmortransflot (KMTF), KMG and KMG I.

Transportation and selling expenses for 2019 were up by 13.4% year-on-year to 420 bln tenge (USD 1,098 mln) mostly due to an increase of gas export volumes to China.

General and administrative expenses were almost stable year-on-year and amounted to 214 bln tenge (USD 559 mln). In 2019, KMG recognized a provision in the amount of 34 bln tenge (USD 90 mln) related to litigation issues between KMG Drilling & Services and the Consortium of companies Ersai Caspian Contractor LLP and Caspian Offshore and Marine Construction LLP on the issues arising from the contract for the purchase of integrated works on construction of a jack-up floating drilling rig. More detailed information is presented in the notes to the consolidated financial statement of KMG for 2019.

Finance costs were down by 25.8% year-on-year and amounted to 317 bln tenge (USD 829 mln) due to recognized interest for the early redemption of Eurobonds in 2018.

Net profit increased by 67.0% year-on-year and equaled 1,158 bln tenge (USD 3,026 mln). The growth is explained by full recovery of accumulated unrecognized shares in the loss of AGP, increased gas exports to China, a finance income increase and a decrease of finance costs for 2019.

Taxes and other obligatory payments amounted to 1,522 bln tenge (USD 3,975 mln), reflecting an increase of 5.4% year-on-year.

Debt load

Gross debt as of 31 December 2019 decreased by 316 bln tenge (USD 780 mln) or 7.6% to 3,838 bln tenge (USD 10,030 mln) compared to 31 December 2018. The decrease of gross debt mainly was attributable to derecognition of loan from partners of the Pearls project for the total amount of 111 bln tenge (USD 290 mln), a decrease of ANPZ debt in the amount of 62 bln tenge (around USD 163 mln), full repayment of the Eurobonds due in 2044 for the amount of 11.6 bln tenge (USD 30.1 mln), repayment of bonds held by the Development Bank of Kazakhstan (DBK) for the amount of 40.5 bln tenge (around USD 113 mln), decrease of a KMG I loan to the amount of 32 bln tenge (around USD 83 mln) and repayments of loans by other subsidiaries.

The cash and cash equivalents balance as of 31 December 2019 including cash in deposits decreased by 25.4% to 1,476 bln tenge (USD 3,859 mln), mainly due to the cash utilization for the acceleration of a prepayments settlement pursuant to the TCO Advanced Oil Sale[5] transaction (USD 1,250 mln settlement ahead of the schedule).

As a result of the above, KMG’s net debt as of 31 December 2019 amounted to 2,361 bln tenge (USD 6,171 mln) reflecting an increase of 8.6% compared to 2,175 bln tenge (USD 5,661 mln) as of 31 December 2018.

Key corporate events:

In January 2019, the Atyrau refinery refinanced the loan of the DBK for the amount of USD 300 mln via (1) the issuance of bonds at Astana International Exchange and (2) a loan obtained from Halyk Bank JSC in order to reduce funding cost;
On 28 March 2019, international rating agency Fitch confirmed its rating at the level “BBB-/Forecast stable”, while increasing the individual rating (stand-alone credit profile) from b to bb-;
On 29 March 2019, KMG obtained the consent of the holders of Eurobonds to be redeemed in 2022, 2023, 2027, 2047 (Eurobonds issued before 2018) for (1) alignment of the covenant package with the terms of the issue of Eurobonds of 2018 and (2) early repayment of Eurobonds in the amount of USD 30.1 mln due for repayment in 2044;
In July 2019, the Atyrau refinery switched the currency of the loan due to DBK for the amount equivalent to USD 152 mln from “USD” to “tenge” as a part of a foreign exchange risk mitigation measure;
On 22 August 2019 rating agency Moody’s affirmed KMG’s long-term rating at Baa3 with the outlook changed from “stable” to “positive”, whereas the standalone rating of KMG has been upgraded from Ba3 to Ba2;
In August 2019, KMG and KTG jointly issued a financial guarantee (each responsible for 50%) to refinance the loan obtained by Beineu-Shymkent Gas Pipeline LLP, for the amount of USD 720 mln in order to improve the terms of the financing;
During 2019, KMG made a full repayment of indexed bonds to DBK for the amount of USD 113 mln;
In 2019, under the TCO crude prepayment KMG fulfilled contractual obligations in the amount of USD 2,250 mln, which includes a USD 1,250 mln settlement ahead of the schedule;
In December 2019, ANPZ entered into a loan agreement with DBK under KMG guarantee in tenge for the amount equivalent to USD 200 mln, that includes refinancing of foreign currency loan from Exim Bank of China in January 2020.

[1] For reader convenience, amounts in US Dollars throughout the press-release were converted at the average exchange rate for the applicable period for amounts taken from the consolidated statement of income and consolidated statement of cash flows and the period-end rates for amounts taken from the consolidated balance sheet (average exchange rates for 2019 and 2018 were 382.87 and 345.04 KZT/USD, respectively; period-end exchange rates as at 31 December 2019 and 31 December 2018 were 382.59 and 384.20 KZT/USD, respectively.

[2] Starting from 2019, the Company revised calculation approach of Earnings before interest, taxes, depreciation and amortization (EBITDA), excluding the finance income from the methodology. In the reports for 2019, and for further periods, the Company calculates EBITDA as “Revenue + Share in profit of JVs and associates, net – Cost of purchased oil, gas petroleum products and refining costs – G&A expenses – Transportation and selling expenses – Taxes other than income tax. Financial metrics for prior periods were recalculated respectively.

[3] Starting from 2019, the Company revised calculation approach of the Free cash flow (FCF), including proceeds from the loan previously provided to Caspian Pipeline Consortium. The Company calculates FCF as “CFO - TCO prepayments, net – Capex (cash basis) + Proceeds from the loan previously provided to Caspian Pipeline Consortium”. FCF metrics for prior periods were recalculated respectively.

[4] AGP is a joint company of JSC KazTransGas JSC (100% KMG subsidiary) and Trans-Asia Gas Pipeline Company Limited (shareholder – CNODC, CNPC subsidiary).

[5] In 2016, KMG entered into a long-term TCO crude oil and liquefied petroleum gas (LPG) supply agreement, which included the prepayment. The total minimum delivery volume approximates 38 mln tonnes of crude oil and 1 mln tonne of LPG in the period from the date of the contract to June and August 2021, respectively.

KazMunayGas Signs Various Agreements with Kazakhstan Manufacturers

Fri, 28 Feb 2020 08:49:42 +0500

On 28 February 2020, JSC NC “KazMunayGas” (hereinafter KMG) signed a number of agreements at the Business Forum dedicated to support of domestic manufacturers.

Today, KMG is active in the sphere of import substitution within the framework of the Program for Support of New Venture Creation by Signing Off-take Agreements. The mechanism for off-take agreements provides for implementation of import substitution projects with a condition of future purchase and supply of commodities to be produced as a result of such implementation.

Within the framework of the Program, CEOs of KMG’s subsidiaries - KazTransOil and Atyrau Refinery - signed agreements with Kazakhstan ventures.

KazTransOil entered into a Memorandum on Cooperation with KARLSKRONA LC AB of Kazakhstan in respect of possible supply of pump units for trunk pipelines. The trunk line pumps will undergo pilot tests, and, subject to a positive opinion of the expert commission, KazTransOil will sign with KARLSKRONA LC AB an off-take agreement for purchase of the equipment.

Atyrau Refinery signed an off-take agreement with Zhaik Petroleum for long-term supply of more than 70,000 tons of methanol during 2022-2024 with a total value of 11.2 billion tenge.

Participation in programs for support of domestic manufacturers and increase of the local content in purchases is regarded by KazMunayGas as a priority task. In 2019, the purchases of goods, works and services by the KMG group of companies totalled 2 trillion 50 billion tenge, wherein the local content equalled 81% or 1 trillion 658 billion tenge.

KazMunayGas Signs a Cooperation Agreement with Petropavlovsk Plant of Heavy Machine Building

Fri, 21 Feb 2020 10:41:45 +0500

On 21 February 2020, National Company “KazMunayGas” (KMG) signed a cooperation agreement with Petropavlovsk Plant of Heavy Machine Building (PZTM). The agreement aims at implementation of the Strategic Partnership Agreement between Samruk-Kazyna JSC and PZTM by organizing supplies of trucks and special equipment for KMG’s subsidiaries.

Thus, in the framework of this event, KMG’s subsidiary Oil Services Company LLC signed a long-term contract with PZTM for supply of special equipment.

KazMunayGas regards support for national producers and increase of local content in purchases as a priority task. In accordance with the contract, PZTM will supply to Oil Services Company special equipment for maintenance and repair of wells.

The documents were signed in the framework of the Procurement Category Strategy approved by the resolution of the Management Board of Samruk-Kazyna. The Strategy is aimed at supporting national producers, including PZMT. One of the approaches of the Strategy is to enter into strategic agreements with Kazakhstan enterprises.

PZTM is among Kazakhstan’s largest producers of equipment for the oil-and-gas producing, oil-and-gas processing, petrochemical, chemical, gas, power, and other industries. The plant is one of the systemic companies in the city of Petropavlovsk.

JSC NC KazMunayGas announces 2019 Trading Update

Wed, 19 Feb 2020 04:30:49 +0500

Nur-Sultan, 19 February 2020 - Joint-stock (JSC) National Company (NC) KazMunayGas (“KMG” or “Company”), Kazakhstan's national vertically integrated oil and gas company, announces its operating results for 2019.

Highlights for 2019:

Oil and gas condensate production was stable year-on-year and amounted to 23,618 thous. tonnes or 26% of total production in Kazakhstan;
KMG announces its reserves, calculated in accordance with PRMS international standards, for the first time ever. KMG’s proved plus probable hydrocarbon reserves amounted to 676 mln tonnes of oil equivalent (5,220 mmboe) as of 31 December 2019;
Oil and gas transportation segment was relatively stable at 78,066 thous. tonnes of oil and 103,494 bln m³ of gas transported;
Domestic demand for light petroleum products was fully covered and further volumes were exported to European and Central Asian markets;
To promote greater transparency, in 2019, the Company for the first time published a Carbon Disclosure Project on greenhouse gas emissions, which discloses KMG’s performance and plans for the climate change adaptation.

	2019	2018	%
Oil production, thous. tonnes	23,618	23,606	0.05%
Gas production, mln m³	8,455	8,137	3.9%
Oil transportation, thous. tonnes	78,066	75,038	4.0%
Gas transportation, mln m³	103,494	111,567	-7.2%
Oil refining, thous. tonnes	20,588	19,715	4.4%

CEO Alik Aidarbayev comments on the 2019 operating results of KMG:

“I am proud to report that 2019 was another remarkable year for KMG, strengthening our position as Kazakhstan’s national oil and gas champion. In 2019, we continued to operate in a safe and responsible manner in the upstream, midstream and downstream segments.

We continue to recognize that the trust of our key stakeholders is essential to KMG remaining a reliable and responsible company and we are making good progress delivering on our strategy of maximizing stakeholder returns. KMG continues to ensure safe operational excellence while bringing benefit to the communities in which we operate.”

Operating results for 2019
Hydrocarbon production

In 2019, oil and gas condensate production was almost unchanged year-on-year and amounted to 23,618 thous. tonnes (485 kbopd). Natural and associated gas production increased by 3.9% to 8,455 mln m³.

KMG's share in oil and gas production of mega fields (Tengiz, Kashagan, Karachaganak) amounted to 8,142 thous. tonnes (178 kbopd) and 5,819 mln m³, respectively.

KMG’s share in oil production of the Tengiz field increased by 4.1% year-on-year and amounted to 5,958 thous. tonnes (130 kbopd) and in gas production increased by 4.2% to 3,258 mln m³. The main driver of oil and gas production growth was the stable operation and higher reliability of the SGI/KTL/SGP (Sour Gas Injection/ Complex Technology Lines/ Second Generation Plant) plants despite suspending production for a scheduled overhaul at Tengiz’s KTL-1 that was conducted from 1 August 2019 to 9 September 2019 (40 days).

KMG’s share in oil production of the Kashagan field increased by 6.9% to 1,169 thous. tonnes
(25 kbopd) and gas production increased by 10.4% to 700 mln m³. The growth is primarily due to the scheduled overhaul of onshore and offshore complexes from 14 April to 19 May 2019 and an increase of the utilization ratio to 98.4%. Peak gross production at Kashagan reached around 400 kbopd in 2019 and the average daily production for the 4th quarter of 2019 amounted to 344 kbopd. For the first time, a major overhaul was successfully completed at the Kashagan field with a complete shutdown of all production facilities.

KMG’s share in liquid hydrocarbon production of the Karachaganak field decreased by 7.3% year-on-year to 1,015 thous. tonnes (22 kbopd). Gas production decreased by 1.6% to 1,861 mln m³. The decline is mainly attributable to a complete shutdown of the production facilities Karachaganak Processing Complex and two gas-processing units for conducting a scheduled overhaul from 16 September 2019 to 10 October 2019 (25 days).

KMG’s share in oil and gas production of operating assets was slightly down and amounted to 15,476 thous. tonnes (307 kbopd) and 2,636 mln m³, respectively. The production decrease of operating assets is primarily driven by the natural decline of oil production at Kazgermunai and PetroKazakhstan Inc. by 17.7% year-on-year and 15.5% year-on-year, respectively, which is in line with the production plan decline.

New contracts/agreements

In 2019, KMG worked to attract strategic partners in new subsoil use projects and expand cooperation with international oil and gas companies in the field of exploration.

KMG signed contracts and obtained subsoil use rights for joint exploration and production with LUKOIL in the Zhenis area and with ENI in the Abai area, which are located in the Kazakhstan sector of the Caspian Sea. In addition, as part of the heads of agreement signed by KMG and LUKOIL on the project I-P-2, work is in progress to obtain subsoil use rights;
In 2019, KMG also signed several agreements to expand cooperation in the oil and gas industry: agreements on joint site explorations with LUKOIL and Norwegian company Equinor; memoranda with BP, Tatneft and the Azerbaijani company SOCAR.

Hydrocarbon reserves

For the first time ever, KMG releases a summary of its reserves report prepared in compliance with international PRMS standards. According to the international independent consulting firm DeGolyer & MacNaughton, KMG’s proved plus probable hydrocarbon reserves (2P) amounted to 676 mln tonnes of oil equivalent (5,220 mmboe) as of 31 December 2019, of which oil and condensate account for 76% of total 2P reserves. 2P reserves life (based on oil and condensate at 2019 production levels) is at 23 years.

The following table is a summary of net reserves[1] under PRMS as of 31 December 2019.

Reserves	Oil & Condensate, mln barrels	NGL[2], mln barrels	Sales Gas, bcf	Hydrocarbon reserves, mmboe
Proved (1P)	2,825	168	5,204	3,860
Proved plus Probable (2P)	3,993	189	6,228	5,220
Proved plus Probable plus Possible (3P)	4,686	224	7,070	6,089

Reserves	Oil & Condensate, mt	NGL, mt	Sales Gas, bcm	Hydrocarbon reserves, mmtoe
Proved (1P)	371	14	147	499
Proved plus Probable (2P)	524	16	176	676
Proved plus Probable plus Possible (3P)	616	19	200	790

MMboe= million barrels of oil equivalent; MMtoe= million tonnes of oil equivalent; mt = million tonnes; bcf = billion cubic feet; bcm = billion cubic meters; 6,000 cf = 1 boe; 1 cm = 35.31466 cf; 1 ton ~ 7.62 barrels.

Oil and gas transportation

In 2019, KMG’s share[3] in oil transportation increased by 4.0% to 78,066 thous. tonnes as a result of growth in offshore transportation, which is carried out by NMSK Kazmotransflot LLP (KMTF). Offshore oil transportation increased 1.5 times, mainly due to the agreement signed at the end of 2018 on supply and transportation between KMTF, KMG and KMG International.

KMG’s share in oil transportation by Caspian Pipeline Consortium (CPC) increased by 3.6% to 13,126 thous. tonnes. In May 2019, the shareholders of CPC decided to implement a project to eliminate the bottlenecks of the CPC pipeline to increase its capacity in the Kazakhstan sector by 35% to 72.5 mln tonnes per year with a project implementation period from 2019 to 2023.

In 2019, gas transportation volumes decreased by 7.2% year-on-year to 103,494 mln m³ mainly due to the decline in transit gas volumes resulting from redistribution of Russian gas flows supplied by PJSC Gazprom and reduction in the volume of transit of Central Asian gas to China.

Sales volumes of gas for sale in 2019 amounted to 22.8 bln m³. Of these volumes 8.8 bln m³ were sent for export, 81% of which was exported to the territory of China under a signed contract in October 2018 to export gas to China for the amount of up to 10 bln m³ per year.

Crude oil sales

In 2019, sales of oil and gas condensate produced by KMG were relatively stable year-on-year and amounted to 23,509 thous. tonnes, 70% of which were exported.

Own produced crude oil sales to the domestic market totaled 7,130 thous. tonnes (including 6,672 thous. tonnes of crude oil supplied to three refineries for further sale of oil products).

Refining

In 2019, refining volumes in Kazakh and Romanian refineries increased by 4.4% year-on-year to 20,588 thous. tonnes:

Refining volumes of Kazakh refineries (including KMG’s share) increased by 3.3% year-on-year to 13,822 thous. tonnes mainly due to an increase in refining volumes at the Shymkent refinery on the back of an increase in refining capacity after the completion of the modernisation programme;
Refining at KMG International refineries (Petromidia, Vega) in Romania increased by 6.9% year-on-year to 6,767 thous. tonnes as a result of improving the mixture of crude oil for processing and maintaining the average daily processing rate at the Petromidia refinery at a record level.

In 2019, production of oil products at Kazakh and Romanian refineries increased by 4.3% year-on-year to 19,126 thous. tonnes:

Production of oil products at Kazakh refineries (net to KMG) increased by 3.0% year-on-year to 12,513 thous. tonnes mainly due to an increase in refining volumes at the Shymkent refinery on the back of an increase in refining capacity after the completion of the modernisation programme. In 2019, the light oil products yield at all three refineries was at 64% compared to 61% in 2018. In 2019, domestic demand for light petroleum products was fully covered and 37 thous. tonnes of own produced gasoline were exported to European and Central Asian markets;
Oil products production at KMG International refineries (Petromidia, Vega) in Romania increased by 6,9% year-on-year to 6,614 thous. tonnes as a result of improving the mixture of crude oil for processing and an increase of demand in the market.

Ecology and industrial safety

KMG has been focusing on measures for preventing the negative impact of its operations on the environment and personnel health.

In 2019, KMG has achieved significant progress in reducing APG flaring rates from 6.0 to 2.95 tons per 1,000 tons of hydrocarbon production due to the commissioning of a comprehensive gas processing units at the Prorva group of fields in JSC “Embamunaygas”, a 100% owned subsidiary of KMG, and Kozhasay group of fields in JSC “KazakhOil Aktobe”, a 50% owned subsidiary of KMG. The reduction of APG flaring is a priority area in KMG’s development strategy;
In 2019, KMG issued its first verified report on greenhouse gas emissions for 2018 under the CDP (Carbon Disclosure Project) climate change programme, disclosing data on direct and indirect GHG emissions across all KMG assets, including its subsidiaries in Romania and Georgia. The report is available at: http://ir.kmg.kz/.

	UoM	2019	2018	%	IOGP[4]
NO_x emissions	tons per 1,000 tons of raw hydrocarbon production	0.21	0.20	5%	0.37
SO_x emissions	tons per 1,000 tons of raw hydrocarbon production	0.18	0.25	-28%	0.20
Associated petroleum gas flaring intensity	tons per 1,000 tons of raw hydrocarbon production	2.95	6.00	-51%	10.5[5]
Lost time incident rate	1 mln people-hours	0.31	0.32	-3%	0.25⁵
Fatality accident rate	100 mln people-hours	1.28	0.65	97%	0.31⁵

Social responsibility

In accordance with a Presidential decree, in 2019 KMG fully settled its commitments for the construction of new social facilities (a 7,000-seat stadium and congress hall) in Turkestan for a total amount of 21 bln tenge. Along with this, in August 2019, KMG financed the construction of a 1,000-seat amphitheater worth 1.8 bln tenge in Turkestan;
In August 2019, the Company organized a sports competition in Shymkent to support its’ corporate culture. Event has involved over 3,000 amateur athletes from 48 subsidiaries of KMG, and as a result, 350 employees from 26 subsidiaries reached the final.

For further information, please visit http://ir.kmg.kz/ru or contact:

Tel: +7 7172 78 62 27

Email: ir@kmg.kz

About JSC National Company KazMunayGas: JSC National Company KazMunayGas (KMG) is Kazakhstan's leading vertically integrated oil and gas company, operating assets across the entire production cycle from the exploration and production of hydrocarbons to transportation, refining and specialised services. Established in 2002, the company represents the government’s interests in the national oil and gas industry.

KMG’s significant assets are as follows:

UPSTREAM

MIDSTREAM

DOWNSTREAM

Mega projects:

Tengizchevroil (TCO) - 20%

Karachaganak (KPO) - 10%

Kashagan - 8.44%[6]

Operating fields:

Ozenmunaigas (OMG) - 100%

Mangistaumunaigaz (MMG) - 50%

Embamunaigaz (EMG) - 100%

Kazgermunai (KGM) - 50%

Petrokazakhstan Inc (PKI) - 33.0%

Karazhanbasmunai (KBM) - 50%

KazakhOil Aktobe (KOA) - 50%

KazakhTurkmunai (KTM) - 100%

KazMunayTeniz - 100%

KazTransOil - 90%

- Kazakhstan China Pipeline (KCP) - 50%

- Munai Tas - 51%

- Batumi Oil Terminal - 100%

CPC - 20.75%[7]

Kazmortransflot - 100%

KazTransGas - 100%

- ICA - 100%

- AGP - 50%

- KTG Aimak - 100%

- BSGP - 50%

KazRosGas - 50%

Pavlodar refinery - 100%

Atyrau refinery - 99.53%

Shymkent refinery - 49.72%

KMG International - 100%

- Petromidia refinery - 54.63%

- Vega refinery - 54.63%

[1] Net Reserves are defined as that portion of the gross reserves attributable to (1) the interest held by KMG after deducting all interest held by others, as well as (2) interests that are not held by KMG, but which KMG controls.

[2] Natural Gas Liquids.

[3] Oil transportation volume takes into account the transportation volume of each individual pipeline company, including the operating

share of KMG. Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes

are counted more than once in the consolidated volume of oil transportation.

[4] Available IOGP (International Association of Oil and Gas Producers) 2017 average results (https://www.iogp.org/).

[5] Available IOGP (International Association of Oil and Gas Producers) 2018 average results (https://www.iogp.org/).

[6] In October 2015, KMG sold 50% of its shares in Kashagan to Samruk-Kazyna with a call option to buy back all part of shares at any time between 2020 and 2022. KMG and Samruk-Kazyna own 16.88% in total.

[7] 19% through the KMG itself and 1.75% through Kazakhstan Pipeline Ventures (KPV).

KazMunayGas appoints Deputy CEO

Wed, 22 Jan 2020 05:41:51 +0500

On 21 January 2020 Dastan Abdulgafarov was appointed Deputy CEO for Strategy, Investment and Business Development of JSC NC “KazMunayGas”. He will be in charge of implementing KMG's Development Strategy, forming and following up on the business plan, efficient management of the investment project portfolio, conducting transactions for acquisition of new assets and expanding the existing business areas of the national company. Earlier Dastan Abdulgafarov held the position of Chief of Staff – Development Managing Director of KazMunayGas.

The new organizational structure, approved by the resolution of the Board of Directors of 23 December 2019, is to improve the efficiency of the corporate governance and strengthen the strategic problem-solving activities of the national company.

Dastan Abdulgafarov – holds a legal and economic college degree, and an Executive MBA from the Skolkovo Moscow School of Management.

He has been working in the KazMunayGas group for over 17 years. Over the years, he has held the positions of the Director of the New Project Development Department of KazMunayTeniz OOC JSC, Business Development Managing Director, Deputy CEO for Economy and Finance of KazMunaiGas Exploration Production JSC.

Alik Aidarbayev: we support the project of the Presidential Youth Personnel Reserve

Thu, 16 Jan 2020 04:32:11 +0500

Chairman of the Management Board of NC KazMunayGas Alik Aidarbayev met with members of the Presidential Youth Personnel Pool. The meeting was attended by 24 young specialists out of 300 enrolled in the Presidential Pool.

During the event Alik Aidarbayev reviewed the biographies of the participants and shared the activities and plans to develop the national company. In turn, young specialists shared their vision on how to develop the oil and gas industry in Kazakhstan.

“The Presidential Youth Personnel Pool is of strategic importance to Kazakhstan. It's a good project and a social elevator for young specialists. And the participants of today's meeting are proof of that. The pool will serve to determine the people who will run the country”, Alik Aidarbayev said.

As a reminder, late last year the Presidential Youth Personnel Reserve was formed on the instructions of the Head of State which included 300 Kazakhstan citizens. As the national company itself noted, 13 employees of KazMunayGas have been selected to the Personnel Pool.

Construction of Desalination Plant near the Kenderli Recreational Zone Agreed

Fri, 10 Jan 2020 11:22:15 +0500

Ozenmunaigas and KMG Engineering (subsidiaries of KazMunaiGas NC) signed a Memorandum of Understanding and Cooperation with the Zhanaozen city Akimat.

In compliance with the official instruction of the Prime Minister of the Republic of Kazakhstan Mr. A. Mamin dated 18 September 2019, the signed document re-classified the desalination plant construction feasibility study prepared by KMG Engineering to a social project. Accordingly, technical requirements to water quality have been changed to meet the standards of drinking water to be supplied to Zhanaozen population on long-term basis. Desalination plant construction in the area of Kenderly recreational zone, Mangistau region, is planned to be financed by KazMunayGas. The daily capacity is expected to be 50 thousand cubic meters. Currently, Volga drinking water is transported to Zhanaozen from the Kigach River at 2,000 km distance to meet its needs.
As is known, water supply in Mangistau region is a key problem, as the region is located in a semi-desert zone with limited water resources. The Astrakhan-Mangyshlak water pipeline, which is part of the KazMunayGas system, besides oil and gas producing companies, provides the population, industries, municipal and government-funded organizations and agricultural manufacturers with Volga water. However, water consumption is growing as long as population grows and new enterprises emerge, which implied a lack of water pipeline capacity, despite the drinking water supply system enhancement.
In addition, KMG provides water to the region not only through the water pipeline, but with the help of desalination plants as well. Currently, a Karazhanbas desalination plant is under construction, which will release daily at least 17 thousand m³ of Volga water to the region.
KazMunayGas Group, operating its activities in the region of presence and realizing its responsibility, is interested in progressive social and economic development of Mangistau region. Construction of desalination plants will have a positive impact not only on the population of Mangistau region, but Atyrau region as well.

The Astana Financial Services Authority licensed Captive Insurer firm, setting a precedence for Kazakhstani companies to transfer operations and capital to Kazakhstan

Thu, 26 Dec 2019 03:56:08 +0500

The Astana Financial Services Authority (AFSA) issued a license to the Kazakhstan Energy Reinsurance Company Ltd. (KERC) to carry on the Regulated Activities of Effecting Contracts of Insurance and Carrying on Contracts of Insurance as a captive insurer. Under AIFC acts, Captive Insurance Business is the business of Effecting or Carrying out Contracts of Insurance only for the business or operations of the Group to which the Captive Insurer belongs.

The transfer of incorporation of the captive insurance firm to the Astana International Financial Centre (AIFC) marks a positive process of relocation of Kazakhstani capital and assets from foreign jurisdictions. According to AIFC regulations, the transfer of incorporation allows KERC to continue to have all the property, rights and privileges, and be subject to all the liabilities, restrictions and debts, that it had before the continuation.

Kazakhstan Energy Reinsurance Company Ltd. is an affiliated company of JSC NC “KazMunayGas”, carrying on insurance business within JSC NC “KazMunayGas” and the National Welfare Fund Samruk-Kazyna, which is its ultimate parent holding company. KERC’s shareholder is a Cooperative KazMunaiGaz U.A., registered outside Kazakhstan.

As part of investment reforms in Kazakhstan, the AIFC is aimed at accelerating economic growth of the country. The AIFC has implemented a regulatory regime that allows attracting capital to the country, including repatriation of assets. The transfer of incorporation or re-domiciliation of KERC from Bermuda, where it has been previously operating since 2004, to the AIFC, allowed KERC to transfer all legal rights and liabilities to the new entity, which is the same legal person as the originally overseas-incorporated company, as well as become the subject of tax preferences and legal regulation in accordance with international standards.

Mr. Mukhtar Bubeyev, the Acting Chief Executive Officer of the AFSA, said: “The transfer of incorporation of the Kazakhstan Energy Reinsurance Company Ltd. to the AIFC gives a clear message that the legal framework of the AIFC supports Kazakhstani companies willing to relocate operations and assets to Kazakhstan through the AIFC, where a regulatory regime is well placed for doing financial services business and the protection of investments.”

Aigul Beknazarova, the Managing Director – Financial Controller of JSC NC “KazMunayGas”: “We believe that the AIFC opens new opportunities for large companies conducting international business. This is a good opportunity, and we are pleased to take advantage of what this jurisdiction offers. This is not our first transaction on this platform, but we took advantage of the opportunity to transfer of company incorporation to the AIFC jurisdiction for the first time. We hope that the AIFC will continue to be a flexible and convenient platform for business.”

SOCAR and KazMunayGas discuss the prospects of cooperation in Baku

Mon, 23 Dec 2019 05:44:05 +0500

During the visit to Baku, on 21-21 December Alik Aidarbayev, Chairman of Management Board of KazMunayGas, met with Rovnag Abdullayev, SOCAR's President, and the management of Caspian Drilling Company (CDC) at the offshore supply and logistics base.
CDC is upgrading on its premises the Satti jack-up drilling rig (JUR), owned by KazMunayGas.

After the upgrading, the Satti JUR may be involved in the work performed jointly by SOCAR and BP on the Absheron peninsula, and in other operations in the Caspian Sea area.

Let us recall, the official ceremony of acceptance of the Kazakh jack-up drilling rig Satti was held on 19 June 2019 in Baku.
This is the first platform, entirely built in Kazakhstan. It has been built for three years on two shipyards with utilization of an American technology. JUR is intended for drilling works in the Caspian Sea at depths of up to 80 metres.

KMG's Annual Report and Sustainability Report have been recognized as the best in the 2019 Annual Report Contest

Thu, 19 Dec 2019 04:54:10 +0500

The Annual Report and Sustainability Report of NC KazMunayGas (hereinafter - KMG) were recognized as the best in the 2019 Annual Report Contest. The competition is held annually by the QRA rating agency with the support of Kazakhstan Stock Exchange.

Annual Report and Sustainability Report are assessed together in THE BEST ANNUAL REPORT Nomination. The expert committee analyzes the content of reports, completeness of disclosure, structure and readability.

In addition, KMG also won the nomination Best ESG Information Disclosure in Annual Reports (Sustainability Report) which assessed the disclosure of information on corporate governance and sustainability issues (including social policy and HR management, environmental protection, etc.). It should also be noted that annual and sustainability reports of KMG's subsidiaries and affiliates were also recognized the best in a number of nominations.

Thus, KazTransOil won in the nomination Best Strategy Disclosure in the Annual Report, Embamunaigas was nominated in the category Best Interactive Version of the Annual Report, and Karachaganak Petroleum Operating B.V. was awarded for the best disclosure of sustainable development issues.

In 2019, 111 annual and sustainability reports of Kazakh companies were evaluated at the contest, including 35 financial institutions and 69 non-financial ones.

The contest aims to promote effective disclosure of information by companies to stakeholders. The results of the contest were summed up by an expert commission, which included professionals in the field of corporate governance and reporting.

It should be noted that in its activities KMG adheres to the policy of openness, transparency, high level of information disclosure and improved corporate governance, as evidenced by the awards received.

KMG and Linde AG sign a Memorandum of Understanding

Fri, 06 Dec 2019 03:51:36 +0500

On 5 December 2019, as part of an official visit of RoK President to Germany, a Memorandum of Understanding (MoU) was signed between JSC NC KazMunayGas (KMG) and Linde Aktiengesellschaft (Linde AG), a German transnational chemical company, in Berlin.

The MoU was signed by Mr. Alik Aidarbayev, KMG Chairman of the Management Board and Mr. Christian Bruch, Member of the Linde AG Management Board. Parties to the MoU intend to cooperate in the area of utilization (disposal) and processing of natural and associated petroleum gas in Kazakhstan, including technology transfer, training and sharing of experience.

“I am convinced that this Memorandum of Understanding signed today will facilitate the gas processing, and our future partnership will bring investments, technologies and new jobs to the Kazakhstan economy and the national oil and gas industry,” said Alik Aidarbayev at the meeting.

In October 2019 KMG and Linde AG specialists discussed a potential joint venture under a gas processing plant project to be built in Zhanaozen, Mangistau Region.

Linde AG is a leading global company in the area of industrial and medical gas production and engineering. The company employs more than 80,000 people worldwide. Linde AG has established itself as reliable partner in the Kazakhstan market by investing in construction of modern, energy-efficient air separation plants in Kazakhstan.

KMG fulfilled its obligations early under the TCO advance oil financing transaction

Wed, 04 Dec 2019 03:49:56 +0500

On 30 November 2019, KazMunayGas (KMG) fulfilled its contractual obligations early to supply oil from Tengizchevroil LLP (TCO) on account of advance payment received from Vitol, an international trading company, and a syndicate of international banks.

Early fulfilment of these obligations was made possible by implementation of a set of measures to improve the financial state, debt management and optimize the cash flow in the KMG Group.

As a reminder – in 2016, KMG conducted a tender among international oil traders to sell 20% of TCO’s oil volumes to which KMG has a priority right of purchase as a TCO shareholder. The key tender requirements included the oil purchase price, stability of shipment and a long-term advance payment at a low cost. Based on tender outcomes, the contract was awarded to Vitol, the largest international trader with a 3 billion USD advance payment by April 2020.

The funds received under the long-term advance payment were used by KMG to finance its subsidiaries, make investments in the Kashagan project, service the debt and for other purposes.

In 2017, following the partial fulfilment of the oil supply obligations and subsequent reduction of the advance payment to 2 billion USD, KMG received an additional 1 billion USD advance payment until April 2021.

The balance of the advance payment gradually decreased in the process of obligations fulfilment. As of 31 December 2016, the advance payment balance was 3 billion USD; as of 31 December 2017 – 2.75 billion USD, as of 31 December 2018 – 2.25 billion USD; as of 31 March 2019 – 1.84 billion USD; as of 30 June 2019 – 1.05 billion USD; as of 30 September 2019 – 404 million USD. Accelerated decline in the balance of the advance payment in 2019 is due to obligations being performed ahead of schedule by KMG (early fulfilment equal to 1.270 billion USD).

It should be noted that after the settlement of the advance payment, oil supply contracts between all parties will remain in place until the expiration date (first half of 2021).

Climate Session in Nur-Sultan

Thu, 28 Nov 2019 05:55:00 +0500

The first in Kazakhstan Forum on Greenhouse Gas Emissions Control (Climate Session) arranged by JSC NC “KazMunayGas” (“KMG”) took place in Nur-Sultan on November 26, 2019.

Maintaining environmental processes and systems is among the key sustainable development goals of JSC NC “KazMunayGas”. As a party to the UN Global Compact, KMG commits to the sustainable development goals focusing on climate changes.

The representatives of KMG Group of Companies, Zhasyl Damu JSC, Carbon Limits (Norway), KAZENERGY Association, Ernst and Young, Caspian Commodity Exchange JSC, NCOC N.V., Karachaganak Petroleum Operating B.V., Tengizchevroil LLP, Chevron and other stakeholders took part in the Forum. Attended by about a hundred representatives of various enterprises of the industry, the Forum has become a place for a meaningful dialogue between professionals, a platform to exchange experiences and knowledge.

The spirited discussions at the Forum concerned the issues of greenhouse gas emissions control in KMG Group, the expected changes in legislation concerning the regulation of greenhouse gas emissions, trading in quotas, KMG reporting under the Climate Program Carbon Disclosure Project, etc.

Botagoz Akhmetova, Director of the Department of the Emissions Trading System at Zhasyl Damu JSC, presented the legal requirements of Kazakhstan as for the state regulation of greenhouse gas emissions and answered some relevant questions of the Forum participants. Representative of Rompetrol (Romania), HSE Director of KMG International N.V. Felicia Andrei shared the experience of the EU countries in greenhouse gas control and the quota system management.

Eric Tanayev, CEO of Caspian Commodity Exchange JSC, spoke on the exchange trading in carbon units. M. Filippova, Head of the Atmospheric Air and Greenhouse Gas Emissions Sector at Karachaganak Petroleum Operating B.V., told others about KPO’s experience in greenhouse gas control and the company’s successful projects.

Torleif Hauglands, Senior Partner of Carbon Limits, shared best practices in methane emissions reduction.

“KMG is a large national oil and gas producer in the country. We are aware of the company’s impact on economic growth and are responsible for the implementation of the environmental programs, minimizing the company’s environmental impact. Therefore, I hope that the current Forum will be an important step in achieving our goals, and each of you will contribute to improving the environmental situation around the world.” said Kairat Saktaganov, HSE Co-Managing Director at JSC NC “KazMunayGas”.

JSC NC KazMunayGas operating and financial results for the nine months ended 30 September 2019

Fri, 22 Nov 2019 07:39:10 +0500

Nur-Sultan, 22 November 2019 – Joint-stock (JSC) National Company (NC) KazMunayGas (“KMG” or “Company”), Kazakhstan's national vertically integrated oil and gas company, announces its operating and financial results for the nine months of 2019 according to International Financial Reporting Standards (IFRS).

Operating Highlights for the nine months of 2019[1]:

Oil and gas condensate production almost unchanged year-on-year and amounted to 17,593 thous. tonnes (483 thous. barrels of oil per day[2]);
Natural and associated gas production up 2.6% year-on-year to 6,227 mln m³;
Oil transportation up 5.4% year-on-year to 58,696 thous. tonnes;
Gas transportation down 11.5% year-on-year to 74.4 bln m³;
Refinery volume up 2.2% year-on-year to 15,282 thous. tonnes. Volume includes refinery volume of 10,201 thous. tonnes in Kazakhstan and 5,081 thous. tonnes in Romania (KMG International). Total oil products production up 2.7% year-on-year to 14,310 thous. tonnes;
Sales volume of crude oil produced by KMG almost unchanged year-on-year at 17,807 thous. tonnes.

Financial Highlights for the nine months of 2019[3]:

Revenue down 1.9% year-on-year to 5,128 bln tenge (USD 13,441 mln);
Net profit up 22.5% year-on-year to 794 bln tenge (USD 2,082 mln);
EBITDA[4] up 9.1% year-on-year to 1,592 bln tenge (USD 4,173 mln);
Net debt up 22.9% and amounted to 2,663 bln tenge (USD 6,863 mln) compared to 31 December 2018;
FCF adjusted5 up 41.8% to 319 bln tenge (USD 835 mln).

Key corporate events:

On 22 February 2019, KazMunayGas Exploration Production JSC (KMG EP) completed its preferred shares buyback programme. KMG EP repurchased preferred shares in the amount of 15.9 bln tenge, representing 65% of the outstanding float. As of 14 May 2019 preferred shares of KMG EP were delisted from the KASE official list;
In February 2019, in accordance with its strategy and government plan, KMG completed the sale of its KazMunayGas-branded fueling station network for 60,512 mln tenge, thus exiting the retail petroleum stations business in Kazakhstan;
On 28 March 2019, international rating agency Fitch confirmed KMG’s rating at the level “BBB-/Forecast stable”, while increasing the individual rating (stand-alone credit profile) from “b” to “bb-“;
On 29 March 2019, KMG obtained the consent of the holders of Eurobonds to be redeemed in 2022, 2023, 2027, 2047 (Eurobonds issued before 2018) for (1) alignment of the covenant package with the terms of the issue of Eurobonds of 2018 and (2) early repayment of Eurobonds in the amount of USD 30.1 mln due for repayment in 2044;
On 29 April 2019, Mr. Luis Maria Viana Palha Da Silva was elected as Board Member – and Independent Director of KMG;
On 20 May 2019, Mr. Anthony Espina was elected as Board Member of KMG representing core shareholder, Samruk-Kazyna;
In accordance with a Presidential decree, KMG fully settled its commitments for the construction of new social facilities (a 7,000-seat stadium and congress hall) in Turkestan for a total amount of 21 bln tenge. Along with this, in August 2019, KMG financed the construction of 1,000-seat amphitheater worth 1.8 bln tenge in Turkestan;
On 22 August 2019 rating agency Moody’s affirmed KMG’s long-term rating at “Baa3” with the outlook changed from “stable” to “positive”, whereas standalone rating of KMG has been upgraded from “Ba3” to “Ba2”.

Operating results for the nine months of 2019

Hydrocarbon production

During the nine months of 2019 KMG’s oil and gas condensate production was almost unchanged year-on-year at 17,593 thous. tonnes (483 kbopd). Natural and associated gas production increased by 2.6% to 6,227 mln m³.

KMG's share in oil and gas production of mega fields (Tengiz, Kashagan, Karachaganak) amounted to 5,992 thous. tonnes (175 kbopd) and 4,298 mln m³, respectively.

KMG’s share in oil and gas production of the Tengiz increased by 2.4% year-on-year, amounting to 4,394 thous. tonnes and to 2,405 mln m³, respectively. The main driver of oil and gas production growth was the stable operation and higher reliability of the SGI/KTL/SGP (Sour Gas Injection / Complex Technology Lines / Second Generation Plant) plants.

During the nine months of 2019 KMG’s share in oil and gas production of the Kashagan increased by 6.5% and 9.7% to 838 thous. tonnes and 503 mln m³, respectively. The growth is primarily due to the scheduled overhaul of onshore and offshore complexes from 14 April to 19 May 2019 and an increase of the utilization ratio to 98.4%.

KMG’s share in oil production of the Karachaganak decreased by 8.1% year-on-year to 760 thous. tonnes. Gas production decreased by 2.2% to 1,391 mln m³. The decline is mainly attributable to high gas factor and increasing water-cut.

During the nine months of 2019 KMG’s share in production of operating assets was slightly down and amounted to 11,601 thous. tonnes (308 kbopd). The production decrease of operating assets is primarily driven by the natural decline of oil production at Kazgermunai and PetroKazakhstan Inc. by 16% year-on-year and 14% year-on-year, respectively.

Key events in Upstream

On 16 February 2019, the implementation of an investment project for the modernisation of a Jack Up Drilling Rig (JUDR) for 21.6 bln tenge or USD 57 mln was approved for the participation in drilling projects in the Azerbaijani sector of the Caspian Sea. KMG and the State Oil Company of Azerbaijan Republic (SOCAR) signed an agreement on trust management of the JUDR.

On 1 April 2019, KMG, the Ministry of Energy of the Republic of Kazakhstan, KMG and PJSC “LUKOIL” (LUKOIL) signed a contract for the exploration and production of hydrocarbons in the Zhenis site located in the Kazakhstan sector of the Caspian Sea. In accordance with KMG and LUKOIL estimations, extractable reserves (C3) of the project are 65.1 mln tonnes. The project operator is Zhenis Operating LLP (a 50:50 joint venture between KMG and LUKOIL).

On 17 May 2019, KMG and British Petroleum (BP) signed a Memorandum of Understanding for the joint study and research of the available technical data from existing KMG fields and third parties.

On 7 June 2019, KMG and LUKOIL signed an agreement on the principles of the project “I-P-2”, the site of the same name located in the Kazakhstan sector of the Caspian Sea. In accordance with LUKOIL estimations, extractable reserves (C1) of the project amounted to 15.1 mln tonnes.

On 26 July 2019, the Ministry of Energy of the Republic of Kazakhstan, KMG and Eni S.p.A. (Eni) signed a contract for the exploration of hydrocarbons in the Abai field located in the Kazakh sector of the Caspian Sea. The project operator is Isatay Operating Company LLP (a 50:50 joint venture between KMG and Eni).

From 1 August 2019 to 10 September 2019 (40 days), a scheduled plant overhaul at Tengiz’s KTL-1 was conducted.

From 16 September 2019 to 10 October 2019 (25 days), a scheduled overhaul at Karachaganak was conducted.

On 20 September 2019, KMG and LUKOIL signed an agreement on joint site explorations in the Republic of Kazakhstan (RK).

On 24 September 2019, KMG and Equinor signed an agreement on joint site explorations which assume geological and geophysical surveys to identify the hydrocarbon potential of oil and gas sites in the Republic of Kazakhstan.

Crude oil sales

During the nine months of 2019 sales of oil and gas condensate produced by KMG were relatively stable and amounted to 17,807 thous. tonnes, 12,583 thous. tonnes of which were exported.

Own produced crude oil sales to the domestic market remained almost the same year-on-year and totaled 5,224 thous. tonnes (including 2,500 thous. tonnes of crude oil volumes under the processing scheme).

Oil and gas transportation

During the nine months of 2019 KMG transported 58,696 thous. tonnes of oil (including KMG’s share⁶), reflecting an increase of 5.4% year-on-year. Increase in oil transportation volumes was mainly attributable to growth in offshore transportation, which is carried out by NMSK Kazmotransflot LLP (KMTF).

For the nine months of 2019 the volume of KMTF transportation increased by 68.9% year-on-year to 8,372 thous. tonnes. The growth was mainly due to the agreement signed at the end of 2018 on supply and transportation between KMTF, KMG and KMG I, resulting in increased volumes of oil transportation in the Mediterranean and Black Seas.

Oil pipeline transportation slightly decreased to 50,324 thous. tonnes mainly due
to lower volumes supplied for transportation by the producers in Kyzylorda region.

During the nine months of 2019, gas transportation volumes decreased by 11.5% year-on-year to 74,369 mln m³ mainly due to the decline in transit gas volumes resulting from redistribution of Russian gas flows supplied by PJSC Gazprom and reduction in the volume of transit of Central Asian gas to China.

Key events in Midstream

In April 2019, KMG launched the feeder transportation on the Trans-Caspian international transport route. The operator of this route is KMTF.

In May 2019, the shareholders of the Caspian Pipeline Consortium (CPC) decided to implement a project to eliminate the bottlenecks of the CPC pipeline to increase its capacity in the Kazakhstan sector to 72.5 mln tonnes per year with a project implementation period from 2019 to 2023.

Refining

During the nine months of 2019 refining volumes increased by 2.2% year-on-year to 15,282 thous. tonnes.

Refining volumes of Kazakhstan refineries increased by 3.1% year-on-year to 10,201 thous. tonnes mainly due to an increase in refining volumes at the Shymkent refinery on the back of an increase in refining capacity after the completion of the modernisation programme:

3,915 thous. tonnes at the Atyrau Refinery, down 0.7%;
3,931 thous. tonnes at the Pavlodar Refinery, up 0.5%;
2,023 thous. tonnes (KMG’s share - 50%) at the Shymkent Refinery, up 18.0%;
332 thous. tonnes (KMG’s share – 50%) at Caspi Bitum, up 1.5%.

Refining at KMG I refineries increased by 0.6% year-on-year to 5,081 thous. tonnes:

Petromidia (Romania) refining volumes were up 0.4% to 4,756 thous. tonnes;
Vega (Romania) refining volumes were up 3.5% to 325 thous. tonnes.

Production of oil products at all refineries increased by 2.7% year-on-year to 14,310 thous. tonnes.

Production of oil products at Kazakhstan refineries (net to KMG) increased by 3.9% year-on-year to 9,333 thous. tonnes:

2,484 thous. tonnes of gasoline, up 4.3%;
3,051 thous. tonnes of diesel, up 6.7%;
361 thous. tonnes of jet fuel, up 137.2%;
3,437 thous. tonnes of other oil products, down 4.3%.

Oil products production at KMG I refineries increased by 0.6% year-on-year to 4,977 thous. tonnes:

1,204 thous. tonnes of gasoline, down 4.6%;
2,192 thous. tonnes of diesel, down 0.4%;
312 thous. tonnes of jet fuel, up 26.0%;
1,268 thous. tonnes of other oil products, up 2.6%.

Financial results for the nine months of 2019

During the nine months of 2019 revenue decreased by 1.9% year-on-year to 5,128 bln tenge (USD 13,441 mln). The downtrend was mainly attributable to the decrease in KMG I’s crude oil sales volumes and the decrease in average Brent prices by 10.5%, which was partially offset by increased gas exports to China and tenge depreciation against US Dollar by 13.4%. The crude oil sales of KMG I decreased by 10% year-on-year to 1,201 bln tenge (USD 3,148 mln). Gas exports to China increased by 23.7% and amounted to 501 bln tenge (USD 1,313 mln). During the nine months of 2019, under the TCO crude prepayment7 KMG made an advance settlement in the amount of USD 1,846 mln which includes a USD 1,270 mln settlement ahead of the schedule.

Cost of sales amounted to 3,837 bln tenge (USD 10,058 mln), reflecting a decrease of 3.8% year-on-year due to lower costs of the purchased crude oil and a decline in global oil prices partially offset by increase in gas purchase volumes and tenge depreciation against US Dollar. Сost of purchased crude oil decreased by 6.7% year-on-year and amounted to 1,849 bln tenge (USD 4,846 mln). KTG’s cost of purchased gas increased by 29.3% year-on-year and amounted to 315 bln tenge (USD 827 mln).

During the nine months of 2019 the operating profit of KMG decreased by 14.5% year-on-year to 456 bln tenge (USD 1,196 mln).

The earnings from shares in the net profit of joint ventures and associates of KMG increased by 19.8% year-on-year to 639 bln tenge (USD 1,674 mln). The increase is mainly the result of a full recovery of accumulated unrecognized shares in the loss of Asia Gas Pipeline LLP to the amount of 110 bln tenge (USD 290 mln).

Net profit increased by 22.5% year-on-year and equaled 794 bln tenge (USD 2,082 mln).

Taxes and other obligatory payments amounted to 1,162 bln tenge (USD 3,044 mln), reflecting an increase of 11.1% year-on-year.

Gross debt as of 30 September 2019 decreased by 3.7% to 4,001 bln tenge (USD 10,312 mln) compared to 31 December 2018.

The consolidated cash and cash equivalents balance as of 30 September 2019 including cash in deposits decreased by 32.6% to 1,338 bln tenge (USD 3,449 mln), mainly due to the acceleration of prepayments settlement pursuant to the TCO Advanced Oil Sale transaction. KMG’s net debt as of 30 September 2019 amounted to 2,663 bln tenge (USD 6,863 mln). Looking ahead, KMG plans to fully settle TCO crude oil prepayments until the end of November 2019.

Key events

In January 2019, the Atyrau refinery refinanced the loan of the Development Bank of Kazakhstan (DBK) for the amount of USD 300 mln via (1) the issuance of bonds at Astana International Exchange and (2) a loan obtained from Halyk Bank in order to reduce funding cost.

In April 2019, KMG fully repaid the Eurobonds due in 2044 for the amount of USD 30.1 mln.

During the nine months of 2019, KMG fully repaid the indexed bonds due to DBK for the amount of USD 113 mln.

In July 2019, the Atyrau refinery has switched the currency of the loan due to DBK for the amount equivalent to USD 152 mln from “USD” to “tenge” as a part of a foreign exchange risk mitigation measure.

In August 2019, KMG and KTG jointly issued a financial guarantee (each responsible for 50%) to refinance the loan obtained by Beineu-Shymkent Gas Pipeline LLP, for the amount of USD 720 mln in order to improve the terms of the financing.

For further information, please visit http://ir.kmg.kz/ru or contact:

Tel: +7 7172 78 62 27

Email: ir@kmg.kz

[1] Operating highlights are represented as net of KMG’s share in those respective assets.

[2] Average conversion rate of each asset was applied for information purposes only.

[3] For reader convenience, amounts in US Dollars throughout the press-release were converted at the average exchange rate for the applicable period for amounts taken from the consolidated statement of income and consolidated statement of cash flows and the period-end rates for amounts taken from the consolidated balance sheet (average rates 9M 2019 and 9M 2018 were 381.52 and 336.51 KZT/USD, respectively; period-end rates as at 30 September 2019 and 31 December 2018 were 387.99 and 384.20 KZT/USD, respectively.

[4] The Company calculates EBITDA for any relevant period as “Revenue + Finance Income – Cost of sales – G&A expenses – Transportation and selling expenses + Depreciation, depletion and amortization + Share in profit of JVs and associates.

5 Free Cash Flow adjusted is calculated as CFO adjusted to net prepayments + Dividends received from joint ventures and associates – Capex.

6 Oil transportation volume takes into account the transportation volume of each individual pipeline company, including the operating share of KMG. Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation.

7 In 2016 KMG entered into a long-term TCO crude oil and liquefied petroleum gas (LPG) supply agreement, which included the prepayment. The total minimum delivery volume approximates 38 mln tonnes of crude oil and 1 mln tonne of LPG in the period from the date of the contract to March 2021.

Strategic Session dedicated to draft new Environmental Code of Kazakhstan

Thu, 21 Nov 2019 05:03:28 +0500

On November 19, 2019, the HSE Block of NC KazMunayGas held a Strategic Session chaired by Zhakyp Marabayev, the Chief Operations Officer, which was dedicated to the new draft Environmental Code of the Republic of Kazakhstan. Rustem Kabzhanov, the Executive Director at KAZENERGY Association also attended that meeting.

At the meeting, those in attendance were updated on the current status of the draft new Environmental Code of Kazakhstan and were provided with the accompanying draft law (key changes, outstanding issues). They also shared their views about further steps that need to be taken to improve the environmental laws of the Republic of Kazakhstan with proper consideration given to the interests of the oil and gas industry.

Kazakhstan starts producing and shipping winter diesel fuel Khazar -38

Tue, 19 Nov 2019 05:56:02 +0500

The Atyrau Refinery, which is within the KazMunayGas Group, has begun producing and shipping Khazar – winter diesel fuel with a cold filter plugging point of -38° C.

“Given the harsh winters in many regions of Kazakhstan, such fuel will be in demand among domestic consumers. The first batch was shipped from the Atyrau Refinery on November 14; 3,088 tonnes have been shipped as of today. In total, the Atyrau Refinery plans to ship 3,500 tonnes in November,” said Daniyar Tiyessov, the Deputy Chairman of the Management Board of JSC NC “KazMunayGas” for Oil Refining and Marketing.

Khazar -38 diesel fuel is a unique product for the refinery and for the entire Kazakhstan. It meets Emission Class K5, as it has the minimum content of sulfur and wax and contains no additives that may affect its low temperature properties – this is a pure product.

This low-pour-point fuel is produced at the only diesel hydrotreatment and dewaxing unit in Kazakhstan – Prime D, which is a part of the Advanced Oil Refining Complex.

It is worth reminding that late in 2018, the Atyrau Refinery produced several types of new petroleum products, such as diesel fuel with CFPP of -25°С and Emission Class K5 and diesel fuel with CFPP -32 (Khazar). This is thanks to the new units launched at the Advanced Oil Refining Complex that were built as part of a large-scale upgrading which made it possible to produce those. Therefore, today the Atyrau Refinery can produce the following types of winter diesel fuels: diesel fuels with CFPP -15°C, CFPP -25°C, CFPP -32°C, CFPP -38°C.

Associated Petroleum Gas Disposal Level Has Reached a Maximum in KMG’s Entire History

Fri, 15 Nov 2019 10:44:12 +0500

The level of disposal of associated petroleum gas (APG) in the KazMunayGas group (hereinafter – KMG) reached 93% in 2018. This is the highest figure in the history of the company. The data is provided in KMG’s 2018 Sustainable Development Report (hereinafter – SDR). The document provides information on KMG’s activities in the social, economic and environmental areas.

According to the Report, the rate of gas flaring is 6 tons per 1,000 tons of hydrocarbons produced, which is almost 50% lower than the global average of the International Association of Oil and Gas Producers (the average is 12.1). The result has become possible thanks to the installation of an integrated gas processing plant at the Prorva group of fields. The volume of direct greenhouse gas emissions from the flare in connection with the launch of the Prorva field plant decreased by 80% and amounted to 41.5 thousand tons (211.6 thousand tons in 2017). By 2030, the group plans to completely stop the practice of regular APG flaring.

Every year the company builds new disposal facilities, reconstructs the existing production facilities, and invests in the construction of pipelines and infrastructure. For example, the integrated gas processing plant commissioned at the Kozhasay field in the Aktobe Province will reduce gas flaring from 173 million m3 to 50 million m3.

In addition, the company allocates the necessary resources for environmental protection, in particular environmental costs, including the payment of taxes for regulatory emissions, environmental protection action costs, insurance, compensatory measures for environmental protection, investments in the prevention of environmental impact, etc.

Please see more details on http://www.kmg.kz/uploads/KMG_NC_OUR_2018_RU_1107_1651.pdf .

KMG and Tatneft signed the Cooperation Roadmap

Fri, 15 Nov 2019 10:36:42 +0500

Chairman of the Management Board, NC KazMunayGas (hereinafter – KMG), Alik Aidarbayev and Director General of Tatneft (hereinafter – Tatneft) Nail Maganov signed the Roadmap on Introduction of the Tatneft Best Practices in the Petroleum Industry of the Republic of Kazakhstan. The implementation period is 2020.

During the meeting, held in Nur-Sultan, the heads of KMG and Tatneft discussed how the partnership can be organized, including the establishment of a joint venture in Kazakhstan.

The parties agreed that Tatarstan experts would analyze the efficiency of the current production system and measurement of production processes in KMG. They will also consult on introduction of WO supervising, diagnostics and flaw detection and environmental audit.

Tatneft, which has considerable experience in developing the fields with hard-to-recover reserves, will start its active interaction with the national operator on organization of the high viscosity oil development system at the Eastern Moldabek site using SAGD technology.

As part of the Roadmap, after receiving geological, technological and economic data on mature fields from KMG, the issue of whether Tatneft will be involvement in their development will be considered.

“I am sure that the signing of the Roadmap will bring our cooperation to a brand new level. The document will lay the foundation for further strengthening of partnership between oil and gas companies of the two countries,” said the head of KMG Alik Aidarbayev.

It should be reminded that, on July 10, 2019, KMG and Tatneft signed a Memorandum of Understanding, which outlined the proposed areas of cooperation. The Roadmap is a logical continuation of the intentions of two companies which specifies the main areas of cooperation.

Upstream Challenges and Concerns

Tue, 12 Nov 2019 10:42:30 +0500

On November 8, Nur-Sultan hosted a strategic session, where Operations representatives of KazMunayGas Group took part. The event was attended by the national company and mining enterprises management. The main goal for Operations was to summarize the first results of KMG Strategy adopted a year ago.

“We have a strategic goal to enhance operational activities. First of all, we are talking about digital transformation, asset structure optimization and building of a new operating model. In the real advanced oil business, we should strive to be even more effective, have high technology, flexible asset portfolio, fast decision-making, remain financially stable and maintain social responsibility of the business,” Alik Aidarbayev, KMG CEO said in his speech.

During the session, Chief Operations Officer Zhakyp Marabayev presented KMG Strategy Action Plan, where oil production business initiatives are discussed as well. It was noted that the Operations, according to the Strategy, have a large-scale objective to intensify and increase oil production. In this regard, the Group will have to address the depletion of fields that struggle a natural decline in production and their high water cut. Additionally, the company is obliged to support social stability in the regions, supply oil, gas and petroleum products to domestic market.

According to KMG Engineering Director General Bakhytzhan Khasanov, one of the main points for company growth should be oil production increase and oil recovery cutting-edge technologies available. However, this goal can be achieved provided high investments and lower tax burden that imply additional tax preferences for EOR investments.

Project development, including the maximum use of existing infrastructure, which would reduce capital costs, as well as attraction of investors to finance projects can also be a solution to the emerging problems. One of the company development opportunities is geographical expansion of the asset portfolio, investments in foreign projects or new licenses.

The priority direction of development is the digitalization. The company is ready to adopt advanced technologies and best practices of world industry leaders. Managing Director of Transformation and Digitalization Nurlan Utenov told about where KazMunayGas is now and where it is moving in terms of digitalization. According to him, digitalization is a steady trend. KMG Digital Transformation Program has been developed this summer and approved by the Board of Directors on September 4, 2019.

According to N. Utenov, the function of the company’s Transformation is to provide methodological and expert digital support to the business based on project approach.

He also shared the short-term plans of Transformation, which is now going to start drawing-up of a KazMunayGas Digitalization Strategy. This document is supposed to support the Corporate Strategy and contribute to KMG’s strategic goals achievement through digitalization. In this regard, involvement of all KMG business lines in preparation of the Strategy is of particular importance.

During the strategic session, the leaders of operating companies Ozenmunaigas, Embamunaigas, Mangistaumunaigas and others discussed the main problems of the businesses.

Atyrau Refinery: Rotten Draw Pond to be Drained

Tue, 05 Nov 2019 09:57:52 +0500

On November 4, 2019, the Atyrau Refinery held a round table to discuss the upgrading of the refinery’s waste treatment plant. The event got together the AR management, famous Kazakh chemists Galina Boyko and Raushan Sarmurzina, representatives of local NGOs, journalists, community leaders and environmental activists of the region.

The round table focused on the implementation of the Tazalyq Project, which includes upgrading and retrofitting of the mechanical treatment facilities of the Atyrau Refinery (2019-2021), retrofitting of biological treatment facilities and construction of a post-treatment unit (2019-2023), as well as retrofitting of the evaporation ponds and the channel of effluents treated to standard quality (2019-2022). Now it can be seen that the project life has been reduced by three years – the completion date changed from 2026 to 2023.

Adilbek Imangaliyev, Lead Engineer of the Environmental Department of the refinery, presented the current progress of the project. According to him, on October 17, 2019, the Atyrau Region Akimat and Atyrau Refinery LLP signed a Memorandum of Cooperation to implement the project for the reclamation of the evaporation ponds of the left-bank area of Atyrau until 2021.

“With the commissioning of the municipal wastewater treatment plant in 2020, the refinery effluents will be discharged to the plant to be treated and sent back to the enterprise for its own needs. This will reduce the water intake from the Ural River by 50%. Moreover, the channel to transport the refinery effluents to WWTP will be of a closed type, which also prevents emission of pollutants to the environment,” Adilbek Imangaliyev said.

Thus, the retrofitting of evaporation ponds means the refinery will completely stop discharging effluents to the Rotten Draw (Tukhlaya Balka) Pond (860 hectares owned by the Atyrau Refinery), which will be drained, and this will help avoiding any negative impact on groundwater, flora and fauna of the Atyrau region.

Further, a closed-type mechanical treatment plant will be built at the refinery, and the introduction of modern technological processes will enable the standard quality of wastewater treatment.

According to Shukhrat Danbay, Atyrau Refinery’s CEOLLP, “the Memorandum signed by the Atyrau Region Akimat and the Atyrau Refinery implies joint management of the project for the reclamation of evaporation ponds.”

“Being the Atyrau residents, , we do address jointly with the Akimat the issue of environmental pollution in our region with substances from the evaporation ponds. Our Tazalyq and the WWTP to be built by the Regional Akimat are two components of one and the same large project. They will make no sense one without another. Therefore, we, for our part, will make every reasonable effort to implement the project on time and we hope the Akimat will do the same,” S. Danbay said.

According to the refinery CEO, the Tazalyq Project is being implemented using the refinery’s own funds supported by the parent company, JSC NC “KazMunayGas”.

Reports were made by the scientists – R. Sarmurzina (Solving the Environmental Aspects of Oil, Gas and Chemical Industries Using Energy Storage Substances) and G. Boyko (Activated New-Generation Aluminum Alloys in Solving Environmental Issues of Oil Sludge Disposal, Demetallization of Heavy Oil Products with Simultaneous Sulfur Removal) at the round table. The scientists talked about the use of various aluminum alloys to extract oil sludge from effluents and demonstrated clearly the principle of operation of such substances.

On Rumours Spread about Employment in Zhanaozen

Fri, 25 Oct 2019 05:43:43 +0500

In view of the information and rumours, spread within the community, concerning “an opportunity so secure employment with Ozenmunaygas JSC for a certain fee”, JSC NC “KazMunayGas” (hereinafter – KMG) would like to announce that this information is not consistent with the reality.

Acts of the individuals, offering to secure employment in this way, are unlawful and criminal. In case you receive such an offer, please report to the law enforcement authorities, or to KMG, using the support line: +7 7172 78 65 65 or e-mail address: doverie@kmg.kz.

The matters of getting employment with KMG's subsidiaries are governed by the appropriate internal documents, determining the employment procedure.

JSC NC “KazMunayGas” advocates strict adherence to legal and ethical rules, and resents any manifestation of violations of the existing laws.

Abat Akmukanovich Nurseitov, Managing Director for Oil and Gas Production at NC «KazMunayGas» passed away

Sat, 12 Oct 2019 04:39:25 +0500

On 12 October 2019, at the age of 56, Abat Akmukanovich Nurseitov, the Managing Director for Oil and Gas Production at the National Company KazMunayGas died prematurely.

Abat Akmukanovich was born on 13 May 1963 in the Atyrau province. In 1986 he graduated from the Kazakh Polytechnic Institute. Having started his career as a blue-collar worker, he achieved great success in his career in the oil and gas industry.

Having devoted his life to the oil and gas industry of Kazakhstan, he held senior positions in such companies as Kumkol Lukoil, Turgai Petroleum, LUKOIL, KazMunaiGas Exploration and Production, Samruk Kazyna, NC KazMunayGas.

For his contribution to the growth of the country, he was awarded the Kurmet order, medals for 20-th anniversary of Kazakhstan Republic, 100-th anniversary of Kazakh oil and 120-th anniversary of Kazakh oil.

Abat Akmukanovich was always industrious, kind, competent and dedicated to his work. He was an example of openness, reliability and high professionalism. We express our deepest condolences to the family and friends in connection with his untimely death.

The team of NC «KazMunayGas»

Construction of the Saryarka gas pipeline completed on time

Wed, 09 Oct 2019 04:35:59 +0500

Today, on October 9, near the city of Nur-Sultan, a ceremony of welding the final tie-in of the Saryarka gas pipeline was held. Representatives of JSC NC “KazMunayGas”, the Ministry of Energy, the Akimat of the city of Nur-Sultan attended the ceremony.

The gas pipeline is being built by order of the First President of Kazakhstan, executive head of the nation Nursultan Nazarbayev. The Samruk Kazyna Fund took an active part in financing the large-scale project, the construction contractor was JSC “OGCC KazStroyService”, and “Astana Gas KMG” was the operator.

It should be noted that subsidiary of JSC NC “KazMunayGas” started the construction of the line section of the project this March. Therefore, it took only 8 months for the constructors to lay the gas pipeline along the route Kyzylorda - Zhezkazgan - Karaganda - Temirtau - Nur-Sultan.

During the ceremony, Akhmetzhan Yesimov expressed his sincere appreciation for the construction and emphasized the importance of an uninterrupted supply of natural gas to the northern and central regions of the country, the conversion of heating facilities from coal to gas, as well as improving the environment of the areas through which the gas pipeline passes.

“The gas pipeline built as part of the Five Social Initiatives of the First President of Kazakhstan has connected Central Kazakhstan and the capital of our state with a single gas transmission network of the country. This is the largest infrastructure project since independence and it was completed in less than a year, ” stated Akhmetzhan Yesimov.

Akim of the capital Altai Kulginov noted that a lot of work was done. The objective of local executive bodies is to distribute gas within the city.

The first phase of the project covers the supply of gas to gas distribution networks to CHPP No.1, No.2 and No.3, Koktal No.1 and No.2, the village of Zheleznodorozhny, South-East area (right and left). After completion of the first phase, residents of 13.5 thousand houses may lay on gas.

The second phase of the project covers residential areas Michurino, Internatsionalny, Kuygenzhar (1^st and 2^nd start-up complex), Telman (3^rd start-up complex), Prigorodny, Garden Village, Family Village (4^th start-up complex).

The third phase covers gasification of residential areas Ilyinka (1^st and 2^nd start-up complex), Shubar (3^rd start-up complex), Ondiris (4^th start-up complex).

After commissioning, the gas pipeline will be leased to Intergas Central Asia (ICA), which will transport gas.

Strategic IT session Our Future Depends on Pro-active Approach of Each of Us

Wed, 02 Oct 2019 11:51:44 +0500

On October 1, 2019, NC “KazMunayGas” (“KMG”) held a strategic session on information technology in Nur-Sultan. Zhakyp Marabayev, KMG Chief Operations Officer, Dauren Karabayev, KMG Chief Financial Officer, Dauren Kereybaev, Managing Director for Digitization and Transformation at Samruk-Kazyna as well as managers and experts of the IT Block of KMG and its subsidiaries and affiliates attended the session. The purpose of the event is to form a common vision and action plan for the development of IT functions for the KMG Group. It should be noted that the meeting of the entire KMG IT community at this level is being held for the first time.

As part of the program of the event, a panel session was held where Zhakyp Marabayev, KMG Chief Operations Officer and Dauren Karabayev, KMG Chief Financial Officer, as representatives of KMG's business, announced their expectations of IT functions and took part in the discussion of important issues that were shared at the press conference with representatives of IT departments of subsidiaries and affiliates and KMG.

The speakers at the event - Dauren Kereybaev, Managing Director for Digitization and Transformation at Samruk-Kazyna, Nurlan Kussainov, Managing Director for Information Technology at KMG, Nurlan Utenov, Managing Director for Transformation and Digitization at KMG - noted that the strategic session is an important event both for purposes of sharing the experience and knowledge in the field of development of information systems, and for purposes of of strengthening transformation processes within the KMG Group.

To date, the implemented IT projects within the KazMunayGas Group have given a real economic effect. For instance, in 2018, KazTransGas Onimderi saved 400 million tenge with the help of the maintenance planning system. The economic effect from the outsourcing of the IT function of KazTransOil amounted to 2.2 billion tenge.

Nurlan Kussainov told about the current state of the block of information technology, implemented projects, development goals and outstanding issues. “IT is a service department that helps businesses resolve issues, serves to improve and facilitate the working conditions of production workers,” he stated.

Nurlan Utenov shared in details the concept of Digital Transformation and the implementation of the program KMG Digital Transformation. Today, the updated portfolio of the program includes 14 projects and 14 events aimed at comprehensive changes in people, business processes and technology.

During the event, the projects Centralization of IT Management Processes, Implementation of a Data System, KMG IT SSC and Cyber Shield were also discussed. Project managers shared the results achieved and their future plans.

Moreover, a round table was arranged on the topic Formation of a Plan for the Development of IT functions in KMG. The roundtable attendees discussed a number of issues of implementing innovative digital technology, new approaches to automating production, providing high-quality IT services and exchanged their views and experiences.

Saryarka Gas Pipeline Construction Complies with the Approved Schedule

Mon, 30 Sep 2019 11:46:19 +0500

Contractors of Saryarka Gas Pipeline supervised by National Company KazMunayGas said that project progress complies with the approved schedule.

To date, job of automated welding systems is done – welding 1,061.3 km of pipes have been finished.

515 kilometers of gas pipeline passed through hydraulic pressure testing. Other sections testing preparatory activities are now under way. All pipeline sections will be connected with joint weld as soon as testing is over.

Besides, gas-metering station and five gas distribution stations construction in the cities of Zhezkazgan, Karaganda, Temirtau and Nur-Sultan goes as scheduled.

All Saryarka Gas Pipeline construction operations will be completed by the end of 2019. After that the akimats plan to start gasification of residential areas, including the capital.

Gas pipeline, after commissioning, will be leased by Intergas Central Asia (ICA) that will operate gas transportation.

Currently, gas rate and its structure are not determined. Gas transportation tariffs shall include ICA pipeline operation and lease payment expenditure. On the other hand, tariffs approval falls within the competence of Natural Monopolies Regulation, Business Competition and Consumer Rights Protection Committee under Ministry of National Economy. At the same time, according to the Gas and Gas Supply Act, commercial gas wholesale price margin of KazTransGas within the domestic market is subject to approval by the Ministry of Energy.

It should be recalled that Saryarka Pipeline will enhance the country’s energy security, will ensure uninterrupted gas supply to central and northern regions, and contribute to environmental improvement. In the future, gasification of private and small municipal boiler houses, apartment buildings and power plants is planned.

KazMunayGas: $60-70 oil price is acceptable

Thu, 26 Sep 2019 10:13:01 +0500

An interactive discussion entitled “Future of Oil: Reality and Forecasts” was held at the site of Kazakhstan Energy Week 2019 in Nur-Sultan on 26 September 2019. The pressing topics of the oil and gas industry were discussed by Kanat Bozumbayev, the RoK Minister of Energy, Mohammed Barkindo, Secretary General of OPEC, Alik Aidarbayev, Chairman of the Management Board of KazMunayGas National Company, Tom Schuessler, Senior Vice President, ExxonMobil Upstream Oil and Gas, Alessandro Puliti, Chief Executive Officer, ENI SpA and other world-class experts and representatives of oil and gas companies.

Such issues as the global oil consumption peak, change in the oil supply and demand geography in the years to come, the new energy reality and its influence on Kazakhstan's fuel and energy sector, oil price etc., were raised during the discussion.

“Today we discussed matters and problems which are pressing to KazMunayGas, including the oil price and volatility of the world energy markets. I would like to mention that generally the current oil price corridor within the range of 60-70 U.S. dollars is quite acceptable to KazMunayGas”, A. Aidarbayev noted during his remarks.

KazMunayGas and Equinor Sign the Joint Study Agreement

Tue, 24 Sep 2019 12:23:17 +0500

On September 24, 2019, Alik Aidarbayev, Chairman of the Management Board at JSC NC “KazMunayGas” (“KMG”) met with Tore Loseth, Senior Vice President for Exploration at Equinor ASA (“Equinor”).

The meeting attendees highlighted the importance of the cooperation between Kazakhstan and Norway on oil and gas business and expressed their interest in joint study of some oil and gas areas in the Republic of Kazakhstan in order to be awarded subsoil use contracts going forwards. To that effect, the companies signed a Joint Study Agreement as part of their long-term mutually beneficial cooperation. The document was signed by Dastan Abdulgafarov, Chief of Staff, Managing Director for Development at KMG and Tore Loseth, Senior Vice President for Exploration at Equinor. The Agreement provides for geological and geophysical studies to assess the hydrocarbon potential of oil and gas areas in Kazakhstan.

“We expect that this Agreement will serve as the basis of successful cooperation in future. Both companies are ready to consider Equinor as a strategic partner under exploration and production contracts in Kazakhstan,” Alik Aidarbayev said.

First SPE Symposium held in Nur Sultan

Tue, 24 Sep 2019 06:08:47 +0500

On September 24, an SPE Symposium (SPE is Society of Petroleum Engineers) dedicated to health, safety, environment and social responsibility in the Caspian region was held in Nur-Sultan. The symposium, which is held as part of Kazakhstan Energy Week 2019, was hosted by NC “KazMunayGas” (hereinafter - KMG).

The event was opened by Johana Dunlop, SPE Technical Director; Magzum Mirzagaliev, Minister of Ecology, Geology and Natural Resources; Alik Aidarbayev, KMG CEO; Richard Howe NCOC N.V. Managing Director; Bolat Akchulakov, Kazenergy General Director; Olav Skar, Safety Director of the International Association of Oil and Gas Producers.

More than 300 representatives of oil and gas companies in the Caspian region as well as regional and world occupational safety experts attended the symposium. The key topics of discussion were issues of rational use of natural resources, social and environmental responsibility. The attendees shared their experience in introducing innovations in the field of occupational safety.

It should be noted that KMG did not accidentally become the organizer of the event, as the company is currently focused on proactive actions that help prevent injuries, accidents and negative environmental impacts. Only since the beginning of 2019 occupational injuries have been reduced by a quarter. However, the company continues to improve and is constantly looking for new ways to achieve zero injuries.

“KazMunayGas” strives to meet high standards of occupational safety; we are doing everything to ensure that this culture grows stronger and stronger. And these efforts are already yielding results - over the past five years we have made progress in the field of health and safety. We will steadily continue to work to achieve our goal of 100% safety”, Alik Aidarbayev noted.

KazMunayGas and LUKOIL sign a joint study agreement

Fri, 20 Sep 2019 04:42:00 +0500

On 20 September 2019 Alik Aidarbayev, Chairman of Management Board of JSC NC "KazMunayGas” (KMG), and Vagit Alekperov, President of PJSC LUKOIL (LUKOIL), signed an Agreement on joint study of areas on the territory of the Republic of Kazakhstan. The document was signed during V. Alekperov's visit to Almaty.

Both companies agreed on the principal terms of cooperation and expressed their willingness to take up joint geologic studies in order to assess the hydrocarbon potential of certain areas on the territory of the Republic of Kazakhstan.

“KazMunayGas and LUKOIL enjoy a mutually beneficial partner relationship. The agreement signed today is a next step in the development of our cooperation. I am confident that joined efforts and accumulated experience of both companies will foster effective collaboration when conducting joint studies and further sustainable development of Kazakhstan's oil and gas sector as a whole”, - A. Aidarbayev noted.

KMG and LUKOIL are strategic partners in major projects: Karachaganak, Tengiz, Kumkol, and in the “Caspian Pipeline Consortium” oil-transportation project. In April 2019 the Ministry of Energy of the Republic of Kazakhstan, KMG and LUKOIL signed the Zhenis offshore area hydrocarbons exploration and production contract. In June 2019 the Heads of Agreement on the I-P-2 project were signed.

Local content in KMG procurement achieves 78% as of 1st half of the year 2019

Fri, 13 Sep 2019 09:49:39 +0500

This is KMG Procurement Managing Director Yessen Kairzhan has stated in his speech at the Machinery Builders Forum in Nur-Sultan. This indicator is much higher than the Kazakh oil and gas sector average. Local content share in procurement was increased, in particular, thanks to implementation of category-based procurement management system, which is an important integral part of KMG Group's business process modernization program.

"Category management, where several KMG Group companies pool, within procurement strategies, their needs for goods and services of the same type, has proved effective. Now we have similar procurement strategies pending for 67 more categories of goods, works and services qualified. Currently, 16 of them are under implementation and we are in progress with drafting of 17 other procurement strategies," said Yessen Kairzhan.

An example of pilot Production and Drilling Pipes procurement category strategy was given during the forum. Based on the said strategy KMG signed contracts for long-term supply of tubing with local manufacturers KSP Steel and Kaskor-Mashzavod with total value of the contracts over 40 billion tenge. Last year KMG procured all of the tubing, sucker rods and transformers for oil production from local manufacturers.

It should be noted that cooperation with domestic manufacturers is a priority task for KMG. A local import substitution office has been established to develop and support new manufacturers.

KMG participates in Trades Forum hosted by Tatarstan

Fri, 06 Sep 2019 09:44:32 +0500

Trades Forum with KMG employees participation held in Almetyevsk, Tatarstan, is over. Peers from Tatarstan arranged workshops for Kazakh oilmen.

Since 2016, KMG holds a professional skills contest (Uzdyk Maman) that intends to make worker professions popular. This year, our employees have taken part in an international competition for the first time. The purpose of the employee getaway is to share experience and train specialists, as well as strengthen cooperation between the companies.

During 4 days, 182 employees from 26 organizations representing KMG Group competed in professional skills. The contestants who won the first stage among their teams were entitled to compete in a final round.

Kazakh oilmen battled for the title of the best in 18 categories including oil and gas production operator, reservoir pressure operator, process unit operator, repair mechanic, commercial operator, compressor operator, process pump operator, lathe operator, cementing plant operator, lab technician for chemical analysis, electric and gas welder, electrician for repair and maintenance of electrical equipment, well servicing team, well workover team, etc.

The competition was judged by Tatneft specialists. The jury assessed the practical skills and theoretical knowledge of the contestants.

At the opening ceremony, Deputy CEO Dauren Karabayev awarded the President of Tatarstan Rustam Minnikhanov and Tatneft CEO Nail Maganov with commemorative medals issued for the 120^th Anniversary of Kazakh Oil.

"We are very grateful to our colleagues from the sister republic, who have made every effort to successful event. I am sure that the most important result of the contest will be enhancement of corporate spirit, our employees professional skills, level of knowledge and new experience," said D.Karabayev.

Virtually all companies demonstrated good results. Colleagues from Tatarstan noted the high level of professionalism and skills of Kazakh oil workers.

KazMunayGas and Tatneft signed a Memorandum of Understanding this year in July. The MoU provided anticipated areas of cooperation in the areas of geological survey and joint geological exploration in Kazakhstan and Russia, adoption of new oil production technologies and exchange of production digitalization experience.

KazMunayGas CEO congratulates the oilmen of the Mangistau Province

Sun, 01 Sep 2019 03:16:09 +0500

Mr. Alik Aidarbayev, the Chairman of the Management Board of JSC NC “KazMunayGas”, congratulated the oilmen of the Mangystau Province on their professional holiday and the 120^th anniversary of Kazakhstani oil. Solemn events took place on August 30-31, 2019 in the cities of Zhanaozen and Aktau.

“Over the years of Independence, the national oil and gas industry has reached a fundamentally new level of development. I want to emphasize the incredible work and political will of the First President of the sovereign Republic in establishing and developing the industry. Last year, oil production reached 90 million tonnes. So, over 28 years the production has increased more than threefold. Today, Kazakhstan ranks 13^th in the world in terms of oil and gas production. But most importantly, the living standards of oilmen have improved. There is no comparison between the social and labor conditions of previous years with those of today”, notes Mr. Alik Aidarbayev in his speech.

The day of oil and gas workers is celebrated annually on the first Sunday of September. The professional holiday was officially approved by presidential decree in 2003.

This year is special for local oilmen. The industry celebrates its 120^th anniversary. We remind that in 1899 the first oil was produced at the Karashungul field in the Atyrau Province. This was the starting point for the development of the Kazakhstan oil and gas industry.

Moody’s Investors Service international rating agency upgrades the credit rating of KMG on a standalone basis to Ba2, long-term rating affirmed at Baa3 with outlook changed from stable to positive

Wed, 28 Aug 2019 03:49:04 +0500

On 22 August 2019 the Moody’s Investors Service international rating agency upgraded the credit rating of JSC NC “KazMunayGas” (the Company) on a standalone basis without regard to the support from the Kazakh government from ba3 to ba2, reflecting the improvement in its credit metrics, including reduced leverage and increased interest coverage. Furthermore, the Company's long-term rating has been affirmed at Baa3, with the outlook changed from stable to positive, in view of the updated outlook for long-term sovereign credit rating (Baa3).

JSC NC KazMunayGas operating and financial results for the first half of 2019

Thu, 22 Aug 2019 09:03:31 +0500

Nur-Sultan, 22 August 2019 – Joint-stock (JSC) National Company (NC) KazMunayGas (“KMG” or “KMG Group”), Kazakhstan's national vertically integrated oil and gas company, announces its operating and financial results for the first half of 2019 according to International Financial Reporting Standards (IFRS).

Operating Highlights for the first half of 2019[1]:

Oil and gas condensate production was down 0.5% year-on-year to 11,704 thous. tonnes (484 thous. barrels of oil per day[2]);
Natural and associated gas production was up 0.9% year-on-year to 4,160 mln m³;
Oil transportation increased by 5.0% year-on-year to 38,949 thous. tonnes;
Gas transportation was down 8.7% year-on-year to 50.1 bln m³;
Refinery volume was up 1.7% year-on-year to 9,998 thous. tonnes. Volume includes refinery volume in Kazakhstan of 6,670 thous. tonnes and KMG International (“KMGI”) of 3,328 thous. tonnes in Romania. Total oil products production was up 1.6% year-on-year to 9,360 thous. tonnes;
Sales volume of crude oil produced by KMG was up 0.5% year-on-year to 11,641 thous. tonnes.

Financial Highlights for the first half of 2019[3]:

Revenue was up 1.4% year-on-year to 3,403 bln tenge (USD 8,971 mln);
Net profit was up 73.0% year-on-year to 622 bln tenge (USD 1,641 mln);
Capital expenditure was down 5.8% year-on-year to 167 bln tenge (USD 440 mln);
EBITDA[4] was up 20.5% year-on-year to 1,095 bln tenge (USD 2,888 mln);
Net debt was up 15.0% and amounted to 2,491 bln tenge (USD 6,547 mln) compared to 31 December 2018;
FCF adjusted[5 ]soared by 77.7% and amounted to 128 bln tenge (USD 339 mln).

Key corporate events:

On 22 February 2019, KazMunayGas Exploration Production JSC (KMG EP) completed its preferred shares buyback programme. KMG EP repurchased preferred shares in the amount of 15.9 bln tenge, representing 65.0% of the outstanding float. As of 14 May 2019, preferred shares of KMG EP were delisted from the KASE official list;
In February 2019, in accordance with its strategy and government plan, KMG completed the sale of its KazMunayGas-branded fueling station network for 60,512 mln tenge, thus exiting retail petroleum stations business in Kazakhstan;
In March 2019, international rating agency Fitch confirmed its rating at the level “BBB-/Forecast stable”, while increasing the individual rating (stand-alone credit profile) from b to bb-;
On 29 March 2019, KMG obtained the consent of the holders of Eurobonds to be redeemed in 2022, 2023, 2027, 2047 (Eurobonds issued before 2018) for (1) alignment of the covenant package with the terms of the issue of Eurobonds of 2018 and (2) early repayment of Eurobonds in the amount of USD 30.1 mln due for repayment in 2044;
On 29 April 2019, Mr. Luis Maria Viana Palha Da Silva was elected as Board Member – Independent director of KMG;
On 20 May 2019, Mr. Anthony Espina was elected as Board Member of KMG representing core shareholder, the Samruk-Kazyna JSC;
In accordance with a Presidential decree, KMG will fund the construction of new social facilities (a 7,000-seat stadium and congress hall) in Turkestan for a total amount of 21 bln tenge. Along with this, in August 2019, KMG financed the construction of 1,000-seat amphitheater worth 1.8 bln tenge in Turkestan.

Operating results for the first half of 2019

Hydrocarbon production

During the first half of 2019 KMG oil and gas condensate production decreased by 0.5% year-on-year to 11,704 thous. tonnes in line with KMG’s plan. Natural and associated gas production increased by 0.9% to 4,160 mln m³.

During the first half of 2019 Kashagan’s oil production was down by 7.6% year-on-year to 5,705 thous. tonnes or 250 kbopd. KMG’s share in Kashagan oil and gas production decreased by 7.6% and 6.3% to 472 thous. tonnes of oil and 278 mln m³ of gas, respectively. The decline in oil and gas production is due to the scheduled overhaul of onshore and offshore complexes and a production halt from 14 April to 19 May 2019.

KMG’s share in Karachaganak’s oil production decreased by 5.4% year-on-year to 535 thous.tonnes. Gas production decreased by 0.5% to 982 mln m³. The decrease in production is mainly attributable to high gas-condensate factor and increasing water-cut.

KMG’s share in Tengiz’s oil production increased by 1.5% year-on-year to 2,992 thous.tonnes. Tengiz gas production increased by 1.3% year-on-year with KMG’s share amounting to 1,636 mln m³ due to reliable operation of the SGI/KTL/SGP (Sour Gas Injection / Complex Technology Lines / Second Generation Plant) plants. On 1 August 2019, the KTL plant started its planned overhaul with a duration of 42 days.

KMG’s share in operating assets’ production slightly decreased by 0.5% and amounted to 7,707 thous. tonnes. The decrease is primarily driven by natural decline of oil production.

On 1 April 2019, KMG, the Ministry of Energy of the Republic of Kazakhstan, KMG and PJSC “LUKOIL” (LUKOIL) signed a contract for the exploration and production of hydrocarbons in the Zhenis site located in the Kazakhstani sector of the Caspian Sea. In accordance with KMG and LUKOIL estimations, extractable reserves (C3) of the project are 65.1 mln tonnes. The project operator is Zhenis Operating LLP (a 50:50 joint venture between KMG and LUKOIL).

On 7 June 2019, KMG and LUKOIL signed an agreement on the principles of the project “I-P-2”, the site of the same name located in the Kazakhstan sector of the Caspian Sea. In accordance with LUKOIL estimations extractable reserves (C1) of the project are 15.1 mln tonnes.

On 26 July 2019, the Ministry of Energy of the Republic of Kazakhstan, KMG and Eni S.p.A. (Eni) signed a contract for the exploration and production of hydrocarbons in field Abai located in the Kazakh sector of the Caspian Sea. In accordance with prospecting works in 2013 extractable reserves (C3) of the project are 180.3 mln tonnes. The project operator is Isatay Operating Company LLP (a 50:50 joint venture between KMG and Eni).

Crude oil sales

During the first half of 2019, KMG’s share in sales of oil and gas condensate produced by KMG increased by 0.5% year-on-year to 11,641 thous. tonnes including 8,225 thous. tonnes of export volumes.

Own produced crude oil sales to the domestic market slightly decreased by 1.0% year-on-year to 3,416 thous. tonnes (including 1,634 thous. tonnes of crude oil volumes under the processing scheme).

Oil and gas transportation

During the first half of 2019, KMG transported 38,949 thous. tonnes of oil (including KMG’s share[6 ]) by pipelines, reflecting an increase by 5.0% year-on-year.

Increase in oil transportation volumes is mainly attributable to growth in offshore transportation, which is carried out by NMSK Kazmotransflot LLP (KMTF). For the first half of 2019 the volume of KMTF transportation increased by 59.3% year-on-year to 5,489 thous. tonnes. The growth was mainly due to the agreement signed at the end of 2018 on supply and transportation between KMTF, KMG and KMG I, resulting in increased volumes of oil transportation in the Mediterranean and Black Seas.

Redistribution of transportation volumes from the Kenkiyak-Atyrau pipeline to Kenkiyak-Kumkol pipeline caused an increase of volumes (KMG’s share) at Kazakhstan-China Pipeline (KCP) by 4.6% (180 thous. tonnes) and decrease (KMG’s share) at MunayTas NWPC LLP (MT) by 17.6% (190 thous. tonnes).

Decrease in oil transportation volumes by 1.0% or in the amount of 229 thous. tonnes was reported by KazTransOil JSC (KTO), on the back of reduction in oil deliveries from third parties to KTO oil pipelines.

During the first half of 2019, gas transportation volumes decreased by 8.7% year-on-year to 50.1 bln m³ mainly due to a decline in transit gas volumes resulting from a redistribution of Russian gas flows of Gazprom and reduction in the gas supply from Uzbekistan and Turkmenistan to China.

The increase in export volumes of gas transportation to China offset the decline in export volumes of Tengiz gas to Russia.

In April 2019, KMG launched the feeder transportation on the Trans-Caspian international transport route. The operator of this route is KMTF.

Refining

Refining volumes increased by 1.7% year-on-year to 9,998 thous. tonnes.

Refining volumes of Kazakhstan refineries increased by 1.8% year-on-year to 6,670 thous. tonnes in line with domestic supply obligations for oil producers:

2,699 thous. tonnes at the Atyrau Refinery, up 3.6%;
2,475 thous. tonnes at the Pavlodar Refinery, down 11.1%;
1,315 thous. tonnes (KMG’s share - 50%) at the Shymkent Refinery, up 35.2%;
181 thous. tonnes (KMG’s share – 50%) at Caspi Bitum, down 3.0%.

Refining at KMG I refineries decreased by 1.4% year-on-year to 3,328 thous. tonnes:

Petromidia refining (Romania) volumes were up 1.4% to 3,126 thous. tonnes;
Vega refining (Romania) volumes were up 4.0% to 202 thous. tonnes.

During the first half of 2019 refining depths at Kazakh refineries changed from 73.8% to 73.5% at Atyrau refinery, increased from 84.1% to 84.7% at Pavlodar refinery and increased from 77.0% to 81.3% at Shymkent refinery, comparing to the first half of 2018[7 ].

Oil products production increased by 1.6% year-on-year to 9,360 thous. tonnes.

Oil products production at Kazakhstan refineries increased by 1.9% year-on-year to 6,105 thous. tonnes:

1,530 thous. tonnes of gasoline, down 0.8%;
1,985 thous. tonnes diesel, up 6.0%;
231 thous. tonnes of jet fuel, up 224.6%;
2,359 thous. tonnes of other oil products, down 5.9%.

Oil products production at KMG I refineries increased by 1.2% year-on-year to 3,255 thous. tonnes:

802 thous. tonnes of gasoline, down 5.0%;
1,437 thous. tonnes diesel, up 1.2%;
200 thous. tonnes of jet fuel, up 34.4%;
816 thous. tonnes of other oil products, up 1.4%.

Financial results for the first half of 2019

During the first half of 2019 revenue increased by 1.4% year-on-year to 3,403 bln tenge (USD 8,971 mln). The growth was mainly attributable to the increase in gas export sales volumes and tenge depreciation against US Dollar. Gas exports to China increased by 46.7% and amounted to 340 bln tenge (USD 896 mln). During the first half of 2019, under the TCO crude prepayment[8 ] KMG made an advance settlement in the amount of USD 1.2 bln, which includes a USD 750 mln settlement ahead of the schedule.

Cost of sales amounted to 2,512 bln tenge (USD 6,622 mln), reflecting a decrease of 3.9% year-on-year due to lower global oil prices partially offset by increase in gas purchase volumes and tenge depreciation against US Dollar. KMG I’s cost of purchased crude oil decreased by 49.3% year-on-year and amounted to 201 bln tenge (USD 530 mln). KTG’s cost of purchased gas increased by 23.1% year-on-year and amounted to 197 bln tenge (USD 519 mln).

During the first half of 2019 KMG’s operating profit increased by 38.2% year-on-year to 399 bln tenge (USD 1,053 mln).

KMG’s earnings from shares in the net profit of joint ventures and associates increased by 32.0% year-on-year to 445 bln tenge (USD 1,174 mln). The increase is mainly attributable to the results of a full recovery of accumulated unrecognized share in loss of Asia Gas Pipeline LLP in the amount of 46 bln tenge (USD 121 mln).

Net profit increased by 73.0% year-on-year and equaled 622 bln tenge (USD 1,641 mln).

Taxes and other obligatory payments amounted to 731 bln tenge (USD 1,928 mln), reflecting an increase by 16.1% year-on-year.

Capital expenditures were reduced by 5.8%, to 167 bln tenge (USD 440 mln) due to the completion of the Kazakh refineries modernisation programme.

Gross debt decreased by 3.8% to 3,995 bln tenge (USD 10,499 mln) compared to 31 December 2018.

Cash and cash equivalents balance as of 30 June 2019 including cash in deposits decreased by 24.3% to 1,504 bln tenge (USD 3,952 mln) mainly due to the acceleration of prepayments settlement pursuant to the TCO Advanced Oil Sale transaction.

As a result of the TCO prepayments settlement acceleration, KMG’s net debt increased by 15.0% to 2,491 bln tenge (USD 6,547 mln) compared to 31 December 2018. Looking ahead, as of 31 August 2019 KMG expects the decrease of outstanding balance of TCO prepayments to USD 606 mln.

In January 2019, the Atyrau refinery has refinanced the loan of the Development Bank of Kazakhstan (DBK) for the amount of USD 300 mln via (1) the issuance of bonds at Astana International Exchange and (2) a loan obtained from Halyk Bank JSC in order to reduce funding cost.

In April 2019, KMG has paid around USD 62 mln to Eurobonds holders for alignment of the covenant package, which includes early repayment of the Notes due in 2044 for the amount of USD 30.1 mln.

In July 2019, KMG has made the final installment repayment of indexed bonds due to DBK for the amount of USD 53 mln.

In July 2019, the Atyray refinery has switched the currency of the loan due to DBK for the amount equivalent to USD 152 mln from “USD” to “tenge” as a part of a foreign exchange risk mitigation measure.

For further information, please visit http://ir.kmg.kz/ru or contact:

Tel: +7 7172 78 62 27

Email: ir@kmg.kz

[1] Operating highlights are represented as net of KMG’s share in those respective assets.

[2] Average conversion rate of each asset was applied for information purposes only. The actual number of barrels may vary from the barrel equivalents of crude oil represented here.

[3] For reader convenience, amounts in US Dollars throughout the press-release were converted at the average exchange rate for the applicable period for amounts taken from the consolidated statement of income and consolidated statement of cash flows and the period-end rates for amounts taken from the consolidated balance sheet (average rates 1H 2019 and 1H 2018 were 379.29 and 326.53 KZT/USD, respectively; period-end rates as at 30 June 2019 and 31 December 2018 were 380.53 and 384.20 KZT/USD, respectively.

[5 ] Free Cash Flow adjusted is calculated as CFO adjusted to net prepayments + Dividends received from joint ventures and associates – Capex.

[6 ] Oil transportation volume takes into account the transportation volume of each individual pipeline company, including the operating share of KMG. Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation.

[7 ] Starting from 2019 the refining depth calculation methodology has been updated. Figures for the first half of 2018 were recalculated in accordance of new methodology.

[8 ] In 2016 KMG entered into long-term TCO crude oil and liquefied petroleum gas (LPG) supply agreement, which involve the prepayment. The total minimum delivery volume approximates 38 mln tonnes of crude oil and 1 mln tonne of LPG in the period from the date of the contract to March 2021.

POCR will produce Jet A-1 aviation kerosene

Thu, 22 Aug 2019 08:34:00 +0500

The Pavlodar Oil-Chemistry Refinery will produce Jet A-1 aviation kerosene to the ASTM D 1655 standard. Setting up the production is planned as part of the refinery's technological modernization.

Furthermore, the plans are to provide desulphurization of the liquefied petroleum gas and commission the hydrogen generation modular unit. The refinery will also continue working on the automated single-point loading, including the installation of the precision balances and mass flow meters for every type of oil products.

Specifically, the refinery has seen the following drastic changes during the modernization: the conversion ratio has been increased to 85%, and the catalytic cracking unit feed rate - from 1,350 thousand tons to 1,868 thousand tons annually.

Currently, the AI-92, 95 petrols and the diesel produced at the refinery meet the Euro-4 international environmental standards as per the requirements of the TR TC 013/2011 Customs Union's Technical Regulations (these classes go by the name of K4 and K5 on the territory of the Customs Union), and output of the jet fuel has been resumed. Consequently, a product with lower sulfur and carcinogen content is produced, which favourably influences the environmental situation in the country as a whole.

“Since 2017 the refinery has commissioned two new process systems: naphtha isomerization and splitter complex and the complex of sulfur recovery units. The crude oil distillation and deep refining complexes have been reconstructed, as well as the delayed coker, 12 new offsite facilities have been raised”, – Renat Salikov, Head of the POCR's Production-and-technical Department, noted.

The capacity of the new light naphtha isomerization unit is 571 thousand tons annually, and that of the complex of sulfur recovery units has been brought to 60 thousand tons annually. At last year-end 5.3 mn tons of feedstocks were processed, yielding 1.4 mn tons of petrols, 1.7 mn tons of diesel, and 77 thousand tons of jet fuel and other products.

Along with the construction of process units, the refinery is modernizing its business processes. As a result of implementing optimization planning based on the SimSciSpiral information system, the POCR production program for 2019 has been developed using the LP model, which has made it possible to increase the accuracy, transparency and flexibility of the production programme planning process, optimize the operating and investment costs of the enterprise and move closer to the transition to a new technological level in accordance with the digitalization concept.

It is worth reminding that in 2018 the technological modernization of the three refineries was completed, resulting in the republic becoming self-sufficient in the production of oil products complying with the K4 and K5 environmental standards. By 2024 POCR is planning to reach the performance indicators of 7.0% in flaring and 0.61% in losses.

Oilmen's Spartakiade started in Shymkent

Tue, 20 Aug 2019 11:20:04 +0500

On August 19, KMG's annual sports contest started in Shymkent to mark the 120th anniversary of Kazakh oil. The organizers said that more than 3,000 athletes from KMG's 52 subsidiaries participated in the qualifying rounds. 350 athletes from 29 companies made their way to the final games.

Shymkent Sports and Recreation Complex hosted an opening ceremony of the games. KMG’s Social Policy and Internal Communications Director Erkin Rakhimbergenov wished the participants a fair and uncompromising contest.

Oilmen will compete to be the champion in 8 sports: arm-wrestling, mini football, volleyball, basketball, chess, table tennis, swimming and toguz-kumalak. According to the organizers, this year's competition will have a special importance.

The Games will take place on the eve of the 120th anniversary of Kazakh oil. This imposes a certain pressure on the competition. First, the Games aim to strengthen the corporate spirit and corporate culture. The teams were very well prepared. You can feel it. Everyone wants to win and bring the victory to his team. Secondly, it is a traditional competition of the national scale. Therefore, each company is seriously preparing for them, said Sultan Kaliyev, Chairman of the Kazakhstan Oil and Gas Industry Trade Union and member of the Organizing Committee.

The first day of the Games began with arm-wrestling. The competition was quite intense. Nevertheless, it was obvious that every oilman was very determined.

I am participating in the arm-wrestling competition. Last year I won. This year I will try to win as well. Of course, working in the oil industry you get physically stronger. Moreover, I have already learnt the technique a little bit. May the best man win. I congratulate everyone on the 120th anniversary of Kazakh oil, said Zhassulan Yesbossynov, an employee of CASPI BITUM JV LLP.

The sporting event will continue until August 23 and will conclude with the closing ceremony. Labor and sport should move in lockstep. Representatives of the oil industry, which is a driver of the national economy, are thus contributing to the development of mass sports in the country.

75% of the Saryarka gas pipeline already completed

Fri, 16 Aug 2019 06:55:23 +0500

Builders of the Saryarka gas pipeline, which is in the area of KMG’s responsibility, have reported the completion of 796.6 kilometres of the trunk line, accounting for 75% of the total length of the linear section of the pipeline.

Saryarka gas pipeline will increase the national energy security, ensure uninterrupted gas supply to central and northern regions and improve the environmental situation. It is planned to gradually switch private and small communal boilers, residential houses and heat and power plants to gas in the future.

The planned completion of the construction of the linear section, which is KMG's responsibility, is scheduled for the end of this year. After that, the Akimats will proceed with provision of gas supply to settlements, including the capital city.

Welding works have been fully completed in the Kyzylorda Province and are currently being carried out in the Karagandy and Akmola Provinces. The project uses the up-to-date welding technology, rendering it possible to lay pipe 6 kilometres of the 820 mm diameter a day.

Welding units are currently in operation:

- in the Karaganda Province - at kilometre 794 (14 km to the tie-in point of the branch to the Karaganda automatic gas distribution station) and at kilometre 844 (36 km after the Karaganda tie-in point) of the gas pipeline;

- in the Akmola Province - at kilometre 970 (27 km north of the border of the Karaganda and Akmola Provinces) and at kilometre 1,056 km of the gas pipeline route (5 km from the tie-in point of the branch to the Astana-1 automatic gas distribution station).

More than 2 thousand people and 800 units of equipment are being engaged in the construction of the trunk gas pipeline. Mobile shift camps have everything necessary for round-the-clock performance of works, offering good living conditions for the staff. AstanaGas KMG JSC, whose shareholders are Samruk-Kazyna Sovereign Wealth Fund JSC and “Baiterek” National Managing Holding JSC, is responsible for the operating activities. KazStroyService OGCC JSC is the general contractor for the construction.

KazMunayGas and the Ministry of Environment, Geology and Natural Resources sign a memorandum of cooperation

Tue, 06 Aug 2019 11:21:06 +0500

On 6 August 2019 JSC NC “KazMunayGas” (KMG) and the Ministry of Environment, Geology and Natural Resources of the Republic of Kazakhstan (the Ministry of Environment) signed the Memorandum of Cooperation In Environmental Protection (the Memorandum). The document was signed by Chairman of KMG's Management Board Alik Aidarbayev and the Minister of Environment, Geology and Natural Resources Magzum Mirzagaliyev.

The Memorandum was signed in order to enhance the quality of the environment, ensure environmental safety and strengthen cooperation. According to the document, KMG's subsidiaries, Karazhanbasmunai JSC, Mangistaumunaigas JSC, Ozenmunaygas JSC, assume obligations for clean-up the oil-contaminated soil within the contract areas, as well as disposal and recycling of the waste, placed at the unorganized sludge dumps. It's worth noting, that the development of oil fields in the Mangistau Province started as early as in the last century, leading to creation of immense oil-contaminated soil areas (various processing wastes and old oil spills). As of now, the KMG group has resolved on disposal of historical contaminations.

As per the memorandum signed, KMG, jointly with its subsidiary and dependent companies, will provide strict adherence to and application of the environmental requirements and standards, make an inventory of waste on the contract areas, apply best practices and environmentally benign technology for waste recycling, land restoration and reclamation, and ensure further utilization of the waste recycling products (decontaminated soil) in the economic activities etc.

In its turn, the Ministry of Environment shall exercise control over the compliance with the environmental legislation requirements, and coordinate implementation of the measures for reducing the environmental impact of KMG group's operations. According to Magzum Mirzagaliyev, Minister of Environment, Geology and Natural Resources, it's for the first time that a company assumes obligations of this scope in Kazakhstan.

“The execution of this document will make it possible to clean a considerable territory of oil-contaminated areas in the west of the country, and maintain favourable environmental profile in the region. The Ministry is also planning a whole package of measures, aimed to protect the environment”, - M. Mirzagaliyev noted.

“The operations of the KMG group are directly associated with environmental impact. That is why we are, like no other, interested in conserving our nation's nature and natural resources, eliminating historical environmental contaminations, and reducing waste. This Memorandum will enable us to joint efforts with Ministry of Environment and enhance the environmental profile in the regions of KazMunayGas presence to the maximum”, – Alik Aidarbayev, Chairman of KMG's Management Board, noted.

KazMunayGas, Ministry of Energy and Total sign a memorandum of cooperation

Tue, 30 Jul 2019 09:35:01 +0500

On 30 July 2019 JSC NC “KazMunayGas” (KMG), the Ministry of Energy of the Republic of Kazakhstan and Total E&P Kazakhstan signed a Memorandum of Understanding in digitalization in the petroleum industry. The Memorandum has been signed in the course of the visit of the French Minister of Economy and Finance Bruno Le Maire to the Republic of Kazakhstan.

In accordance with the signed document, the parties intend to render assistance to the government agencies and other entities in the implementation of the “Digital Kazakhstan” national programme and the subsequent process of developing the petroleum industry digitalization.

Consultations on digitalization, implementation of the digitalization initiatives by drawing on Total's example, improvement of data management, rendering assistance in the staff training and development of competence, promotion of educational initiatives etc. are planned within the framework of the cooperation.

Total is among the top 10 global petroleum majors. That is why their experience in the petroleum industry digitalization and utilization of the latest technology will enable Kazakhstan to adopt the best practices in order to improve the operational performance and increase the oil and gas asset figures. The memorandum singed will not only facilitate cooperation between the two companies, but will considerably expand its limits as well, – Zhakyp Marabayev, KMG's Deputy Chairman of the Management Board for Operations, noted.

Abai area hydrocarbons exploration and development contract signed

Mon, 29 Jul 2019 03:11:39 +0500

On 26 July 2019 JSC NC “KazMunayGas” (KMG), the Ministry of Energy of the Republic of Kazakhstan and Eni S.p.A. signed the “Abai” area hydrocarbons exploration and production contract.

Under the signed contract, principal minimum obligations are drilling of one exploratory well and 3D seismic prospecting at the “Abai” offshore area of the Kazakhstan sector of the Caspian Sea.

Let us recall, in early July this year Direct Negotiation Minutes were signed, under which the parties agreed on the payment in the favour of Kazakhstan of the signature bonus (a one-time fixed payment payable by a subsurface user who acquired the right of subsurface use within a contract territory - RoK’s Tax Code) and on the subsurface user’s obligations in regard of the local content.

This project is an important step towards expanding the resource base for the both companies.

Prime Minister of the RoK Askar Mamin familiarizes himself with the progress of the Integrated Gas-based Petrochemical Complex (Phase I – Polypropylene Production) construction in the Atyrau Province.

Fri, 19 Jul 2019 11:40:48 +0500

On 17 July 2019, as part of the working visit, Kazakhstan's Prime Minister Askar Mamin, together with the Akim of the Atyrau Province Nurlan Nogayev, Chairman of the Management Board of Samruk-Kazyna SWF JSC Akhmetzhan Yessimov and Chairman of the Management Board of JSC NC “KazMunayGas” Alik Aidarbayev, familiarized himself with the progress of construction of the Integrated Gas-based Petrochemical Complex (Phase I – Polypropylene Production) in the Atyrau Province.

The delegation examined in detailed the construction sites of the complex, located on the territory of the “National Industrial Petrochemical Park” special economic zone.

The IGPC (Phase I – Polypropylene Production) includes construction of the process units of propane dehydration (PDH), propylene polymerization (PP), using the licensed technology of Lummus Technology, a global leader in polymer production, and 32 large infrastructure facilities. The purpose of the production is reaching the capacity of 500 thousand tons of polypropylene annually.

Since the project was handed over to the management of JSC NC “KazMunayGas” in June 2018, the project entered the active implementation phase – the dynamics has improved, the construction schedule has been optimized, professionals, having the experience of participation in major projects in the Republic of Kazakhstan, have been mobilized.

In the report of Daniyar Tiyessov, Deputy Chairman of Management Board for Refining and Marketing – Chairman of Kazakhstan Petrochemical Industries LLP's Management Board, he noted that works are underway at the sites for construction of PDH propane dehydration units, PP propylene polymerization units and off-plot facilities. 36 subcontractor companies, including 33 Kazakh companies, have been involved in the construction. Currently 1, 512 people are involved in the project, including 193 of foreign workforce, 112 of them are engineers and other technical workers. Construction of a field office for the General Contractor and subcontractors, the Customer's temporary office and a camp for 2,960 people, 3 cafeterias, a boiler house, and a medical office has been completed. Steel structure and pipe nodes assembly and coating shops have been raised. Total project progress is 35%. Progress in terms of engineering is 58%. The refinery general layout has been developed and approved. 3,489 drawings have been issued for performance of works, the 3D model is 60% ready. Consideration of the 90% readiness of the 3D model has been initiated.

Progress in terms of equipment procurement is 40%: placement or orders for long-lead items has been already completed - 123 equipment items. The majority of orders were placed in Europe. The order for the biggest column - propane and propylene splitter - was placed with the AtyrauNefteMash plant. Today this is the biggest equipment manufacture in Kazakhstan, - there is no comparable equipment even in the refineries. Progress in terms of placement of orders for primary equipment is 91%, placement of orders for auxiliary equipment is underway. The plans are to complete placement of orders for all items of both primary, and auxiliary equipment in 2019. To render logistic services, a Kazakh company has been engaged, which has experience of delivering large-size equipment for the Kashagan and Tengiz Projects. Temporary storage warehouse has been prepared at the construction site, which will receive equipment and materials, awaiting customs clearance.

Progress in terms of construction and assembly works is about 22%. Installation of 18,186 driving piles completed (100%); installation of auger piles completed, 347 pieces installed (100%); concrete work is underway, 57,986 of 68,880 m³ completed (84%). As of today, all 89 titles are covered by construction works. Zero-level works have been completed; installation of above-ground constructions has been started.

Furthermore, transportation infrastructure (TI) is being constructed within the framework of the project. Total length of railway lines is 11.6 km, motorways - 4 km. Earthwork operations and construction of railway tracks are underway.

Kazakhstan's Prime Minister Askar Mamin Visits Atyrau Refinery

Thu, 18 Jul 2019 05:19:00 +0500

As part of the working trip to the Atyrau Province, the Prime Minister of the RoK A. Mamin visited Atyrau Refinery LLP.

CEO of AR LLP S. Danbai reported to the Head of Government on the results of the carried out modernization, which had been implemented in three phases and fully completed in 2018 with the start-up of full-scale production of a valuable petrochemical feedstock, a high added value product - paraxylene (496 thousand tons annually). Let us recall, the refinery has already been shipping another valuable petrochemical product, benzene (133 thousand tons), for exports since 2016 .

Further, S. Danbai related on other important results of the two final phases of the modernization: increase in the production of petrols to 1 million 441 thousand tons annually, diesel – to 1 mn 700 thousand annually, RT jet fuel (and further on - Jet A1) – to 251 thousand tons annually. Additionally, in late 2018 Atyrau Refinery launched full-scale production of the unique low-pour-point diesel KHAZAR -32.

On the whole, thanks to the modernization, all products of the Atyrau Refinery comply with the K4 and K5 environmental classes, the enterprise capacity has been increased by 500 thousand tons – to 5.5 MMtpa, light oil yield - to 71%, the conversion ratio brought to 90%.

The AR's CEO also told the Head of Government about the environmental measures employed by the refinery. In particular, on the implementation of the TAZALYQ effluent treatment facility modernization project, designed to last until 2026, which envisages construction of a closed mechanical treatment facility and revamping of the biological and remediation of the evaporation fields. All these measures are taken using the refinery's own funds, and will enable it to bring the quality of the treated waste water to the norms of cultural-and-social use water, entirely eliminate washout of active sludge and suspended matters into the effluent water, and re-use 70% of the treated water in the refinery. For example, thanks to the recently commissioned tricanter, the AR has reduced the oil-contaminated waste disposal by 80%. That is, the process losses are considerably decreased owing to the return of oil products to the oil-refining process, and the enterprise's funds are saved.

Mamin was also told about other five new refinery infrastructure modernization projects being implemented: Arman (repair of administration and amenity facilities), Bailanys (telecommunication networks modernization), 5S (workplace standardization), “Zheti Kazyna” и Jan’a Jol (renovation of intraplant roads). The Head of Government acquainted himself with the results of the latter in person - almost 80% of the refinery roads included in the project have been already repaved.

Furthermore, S. Danbai reported to A. Mamin on the social programmes for the development of AR LLP's workforce. For example, within the framework of the Youth Year, announced by the Head of State, in 2019 the AR launched a housing programme for young employees, aimed to sell 100 flats in a new residential complex; the keys will be handed over to the talented employees of AR in August 2020 - in the year of the refinery's 75^th anniversary.

We note that A.Mamin visited the refinery during the current capital repair, started on 10 July. S. Danbai reported that the refinery is projecting reaching the planned capacity as early as by the end of the current month.

At the conclusion of the visit, the Head of Government wished the plant performance against all production figures and successful implementation of the initiated projects.

Prime Minister of the Republic of Kazakhstan A. Mamin Visits JV CASPI BITUM LLP

Wed, 17 Jul 2019 12:20:06 +0500

On 16 July 2019 the Prime Minister of the Republic of Kazakhstan Askar Mamin paid a working visit to JV CASPI BITUM LLP (Aktau Bitumen Plant). The plant was built within the framework of the 2010-2014 State Program for Boosted Industrial-and-innovation-based Development of the Republic of Kazakhstan in order to satisfy the road-construction industry requirements for high quality road bitumens.

The Aktau Bitumen Plant was commissioned in December 2013 and is capable of processing up to 1 MMtpa of oil from the Karazhanbas field, which, owing to its technical properties, is the optimal feedstock for producing premium road bitumens.

Thanks to the plant and the products of other domestic producers, the nation's requirements for road bitumen are fully satisfied. By way of comparison, in 2013 imports of bitumen to Kazakhstan were over 200 thousand tons. In 2018 the plant's products filled 37% of the country's domestic market needs.

Currently, the Aktau Bitumen Plant is producing high quality bitumen, including polymer-modified bitumen, which has not been output in Kazakhstan previously. Thanks to its improved heat-, frost- and abrasive resistance, polymer-modified bitumen prolongs the life of asphalt concrete roads by 1.5-2 times.

Muratzhan Mussaibekov, Managing Director for Oil Refining of JSC NC "KazMunayGas”, noted that since the start-up of the plant, 3.52 mn tons of oil were processed, and over 1 mn tons of road bitumens produced, which translates to about 3,500 km of roads. The Aktau bitumen was used during the construction of virtually all strategic motor roads of the Republic of Kazakhstan, including the “Western Europe - Western China” highway. The Aktau Plant bitumen by every measure meets the requirements of the domestic and international standards.

KMG and Tatneft signed a Memorandum of Understanding

Wed, 10 Jul 2019 11:57:27 +0500

Chairman of the Management Board, NC KazMunayGas (KMG), Alik Aidarbayev, and KMG delegation visited Kazan, the capital of Tatarstan.

On 10 July, 2019 as part of the intergovernmental agreement On principles of trade, economical, scientific and cultural collaboration a meeting between Chairman of the Management Board, Samruk-Kazyna JSC, Akhmetzhan Yessimov and Alik Aidarbayev and President of Tatarstan Rustam Minnikhanov was held where the parties expressed their desire to initiate a new phase of cooperation in the oil and gas industry.

The issues discussed included the potential for cooperation between the enterprises of the Republic of Tatarstan and KMG in geological survey, gas and petrochemistry, technical cooperation and digitization.

On the same day NC KazMunayGas and Tatneft PJSC signed a Memorandum of Understanding. The document outlines the expected areas of cooperation in geological survey and joint geological survey in Kazakhstan and Russia, introduction of new oil production technologies and experience exchange in digitization of production.

KMG CEO Alik Aidarbayev noted that Tatneft and KazMunayGas have long-standing and strong relations in the exchange of technical information and staff training:

“I believe that signing the Memorandum will mark the beginning of a new phase of a long joint journey. The prospects for Pre-Caspian Depression development attract huge interest of major international oil companies. Russian companies, including tatar ones, could be actively involved into this process.”

The parties emphasized that meeting in Kazan is not only a platform to discuss the contemporary challenges in the oil and gas industry but an excellent opportunity to find new mutually advantageous points of cooperation. The participants expressed confidence that it would serve to strengthen partnership relations between the leading oil and gas companies of Kazakhstan and Tatarstan.

Minutes of direct negotiations on the Abai project signed

Thu, 04 Jul 2019 03:35:42 +0500

A trilateral meeting between the management of the RoK’s Ministry of Energy, JSC NC “KazMunayGas” (KMG) and Eni S.p.A. was held on 4 July 2019 within the framework of the Foreign Investors’ Council.

In the course of the meeting, the minutes of direct negotiations between the Ministry of Energy, KMG and Eni Isatay B.V. (Eni) on granting the right to exploration and production of hydrocarbons within the framework of joint development at the Abai area in the Kazakhstan sector of the Caspian Sea were signed.

The negotiations resulted in the agreement on the payment in the favour of the Kazakh party of the signature bonus (a one-time fixed payment payable by a subsurface user who acquired the right of subsurface use within a contract territory - RoK’s Tax Code) and on the subsurface user’s obligations in regard of the local content.

The next stage of cooperation will be the signing of the Abai area hydrocarbons exploration and production contract.

We recall, In March 2019 KMG and Eni signed the Joint Operating Agreement and a Carry Agreement (Financing Agreement) as part of the joint implementation of the Abai area project.

KMG's Youth “UNconference”: Beyond Stereotypes

Wed, 03 Jul 2019 09:33:57 +0500

Paying great attention to the development of the human resource and development of the young employees’ leadership, KMG is successfully implementing its own youth-oriented programs. Establishment and activity of young professionals boards in the Group's enterprises, yearly rallies and training workshops, industry-specific competitions to select the best professionals, charity events and community clean-up days on historical sites in the regions of KazMunayGas’ presence is an incomplete list of what is done to engage young people in the company's management.

An unusual format of the youth forum – “UNconference” - held the other day in Nur-Sultan, was selected not without reason. The forum with the “UN” prefix is intended, in the first instance, to assist in strengthening the horizontal ties, exchanging knowledge and experience between the representatives of the corporate centre’s and subsidiaries’ young people. “UNconference” enabled the activists of KMG's youth movement to “break the mold” and in an informal setting go into the matters important to the young people – how to become successful, grow personally and professionally, and, what is of particular importance to KMG – make a contribution to the company's improvement.

Well-known young Kazakhs, who have become the pride of the country and role models, have acted as speakers and business coaches. Contributions of the same-age peers, who have achieved real success in major multinational companies – Azat Murzabayev (Suleiman Demirel University, worked in Twitter, the U.S.), Alibek Datbayev (Team Lead in Booking.com, the Netherlands) and of many others aroused a keen interest from the UNconference attendees.

A master class in upgrading leadership skills was given by the prominent Kazak marathon runner Marat Zhylanbayev – the first and the only athlete in the human history, who has run unaccompanied an aggregate distance of over 160 thousand kilometres in the biggest deserts of Asia, Africa, Australia and Americas.

The forum was organized by the personnel and social activity corporate block of KazMunayGas. The leader of the unit, Managing Director for Human Resource Development Dauletzhan Khassanov, addressed the attendees, noting:

“Our future lies with the youth. The world of today is information-intensive and digital, and it requires of the young people not only knowledge, but an ability to communicate as well. I am confident that the free and informal exchange of opinions will catch the fancy of the forum attendees, and the workshops and business games will provide you with the motivation for professional and personal growth”.

The goals that KazMunayGas sets to young professionals were addressed at a session of the Forum by Deputy Chairman of the Management Board for Production Operations Zhakyp Marabayev. The manager emphasized that KMG's young activists, sharing the corporate values of the country’s main oil and gas company, should become the beachhead of the corporate ideology, innovation-based policy and workplace culture:

“Teambuilding workshops rank high in the programme of our youth forum. Join hands for achieving success. Not everyone is able to survive and succeed on their own, that is why you should look for partners. At least, you will learn to clearly establish common objectives, will find the ways to achieve these objectives, and pave the way to addressing external challenges and threats. At a maximum, you will acquire invaluable skills of managing joint business and ideas”.

A most interesting programme of UNconference continued, as sessions with symbolic names “NE khabar?” (“Howdy?”), “NE zat” (“What's up?”), “NE aitasyn?” (“What do you say?”) opened.

The UNconference hosted training workshops in financial awareness, social networking rules of conduct, and communications, the own success-story of the forum attendees were discussed.

On-site Meeting of KazMunayGas Board of Directors Held in the Kyzylorda Province

Tue, 02 Jul 2019 04:50:54 +0500

On 30 June, the members of KazMunayGas Board of Directors arrived to the Kyzylorda Province on a working visit. The purpose of the trip was to hold an on-site meeting of KazMunayGas Board of Directors in the JV Kazgermunay LLP's oilfield. The field site was visited by: Christopher John Walton - Chairman of the Board of Directors, Non-executive Director, Stephen James White - Member of the Board of Directors, Non-executive Director, Philip John Dayer - Member of the Board of Directors, Non-executive Director, Anthony Espina - Member of the Board of Directors, Abat A. Nurseitov - Managing Director for Oil and Gas Production (Chief Technology Officer), Essen Kairzhan - Managing Director for Procurement and Supply, Bekmurat T. Naizabekov - Managing Director for Marketing and Sales, Damir V. Sharipov - Corporate Secretary.

The members of the Board of Directors visited a number of the Akshabulak field facilities: Oil Processing and Pumping Shop, Gas Treatment and Transportation Facility, operating wells, rotation camp.

The on-site meeting ended in becoming familiarized with the operating results of JV Kazgermunay LLP for 2018 and 1Q 2019 and the implementation of the “Digital Oilfield” project.

KazMunayGas has set a goal to achieve excellence in safety

Mon, 01 Jul 2019 06:53:01 +0500

On July 1, 2019, the V annual forum of general directors of NC KazMunayGas JSC (hereinafter KMG) was held in the city of Nur-Sultan on the topic “Getting to zero”. The event is held to assess the current state of occupational safety and the environment in the KazMunayGas Group and to improve the safety culture.

Executives of KMG and its subsidiaries and affiliates, representatives of a number of Kazakhstan and foreign companies attended the forum. For the first time, representatives of contractors were invited to discuss the company's objectives and issues.

Welcoming remarks to the members of the forum were delivered by Mr. Alik Aidarbayev, the Chairman of the Management Board of KMG, who noted the need to change the culture of thinking and the involvement of all employees in matters of labor, industrial safety and environmental protection. In addition, getting to zero should be the primary goal for partners and contractors of the company. This year it is planned to establish a special control over their compliance with HSE standards.

“This year we launched a program to ensure effective work on safety and environment protection at contractors, as they play an important role in the achievement of our production objectives. Joint close interaction allows us to improve the situation fundamentally. Our expectations are aimed at ensuring that all employees of the KazMunayGas Group and all contractors always leave their jobs safe and sound” - said Mr. Alik Aydarbayev.

It is worth noting that the year 2018 was the best in the company in terms of safety and labor protection indicators for the last 4 years. At the same time, the management of the company set the task for the next meeting to discuss not an improvement of the situation, but the reasons for which zero indicators were not achieved.

The forum also raised topical issues of reducing the negative impact of company activities on the environment and water resources management, enhancing the personal responsibility of the chief executives of the companies in matters of occupational safety and preventing accidents, improving the safety culture.

In order to get to zero in production activities, occupational injuries and environmental damage, the company initiated the first in Kazakhstan SPE Caspian Safety Symposium on safety issues to be held as part of the KAZENERGY forum this September.

Integrated Gas Chemical Complex Construction Update

Thu, 20 Jun 2019 05:30:39 +0500

18 June 2019, within the framework of the working visit, the Chairman of the Management Board of JSC "SWF "Samruk-Kazyna" Akhmetzhan Yesimov, the Chairman of the Management Board of JSC "NC "KazMunayGaz" Alik Aydarbayev, and the Akim of Atyrau province Nurlan Nogayev have reviewed the progress with construction of the Integrated Gas Chemical Complex (Phase I – polypropylene production).

The delegation inspected the construction sites of the complex, the newly equipped construction camp located on the territory of special economic zone "National Industrial Petrochemical Technopark".

During the extended session with the Management of JSC " NC "KazMunayGaz" and subsidiaries of "United Chemical Company" LLP, the Deputy Chairman of the Management Board of JSC "NC "KazMunayGaz" for Processing and Marketing – the Chairman of the Management Board of "Kazakhstan Petrochemical Industries Inc.» LLP Daniyar Tiyesov reported on the current status of construction, engineering, procurement and supply of equipment and materials. In particular, on the approval of the master plan of the plant, process flow schemes and development of working documentation for the construction site. Also, according to his report, the 3D model of the enterprise is 60% completed. Kazakhstan Institute "Kazakh Institute of Oil and Gas" LLP takes part in the design of the complex.

Piling works and arrangement of bored piles have been completed. The basic foundation works have been performed. Installation of underground utilities has been started

Local manufacturers are involved in the construction of the integrated gas chemical complex. The manufacture and supply of equipment and materials involved "AtyrauNefteMash" LLP, "Petropavlovsk Heavy Engineering Plant" LLP, "Imstalkon" LLP etc.

Of the 36 subcontractors involved in the construction sites, 33 are local. At the end of the visit, the Head of the Fund "Samruk-Kazyna" Akhmetzhan Yesimov noted the high importance of this project for the economy and development of the petrochemical industry of the Republic of Kazakhstan, noted the positive trend in the development of the project after its transfer to the management of JSC "NC "KazMunayGaz", and instructed to complete the project on time.

In accordance with the order of JSC "SWF "Samruk-Kazyna" on June 28, 2018, the project was transferred to the trust management of JSC "NC "KazMunayGaz". Since the transfer of the project, measures have been taken for a full-scale commencement of construction works and their dynamic promotion; the construction schedule has been optimized and specialists experienced in the implementation of large projects in the Republic of Kazakhstan have been mobilized.

Jack-up Floating Drilling Rig Satti Arrived in Baku

Thu, 20 Jun 2019 05:25:46 +0500

On June 19, 2019, the official acceptance ceremony of Kazakhstan's Jack-up Floating Drilling Rig Satti (hereinafter - Jackup) was held in Baku. The event was attended by the Chairman of the Management Board of JSC NC "KazMunayGaz" (hereinafter – KMG) Alik Aydarbayev and the President of the Azerbaijan State Oil and Gas Company Socar (hereinafter – Socar) Rovnag Abdullayev.

"Such projects are a symbol of friendship and constructive cooperation between the two companies. We intend to further develop joint activities with our partners and support common projects. This leads not only to the capacity building for both sides, but also allows to improve the competence and competitiveness of the Kazakhstan oil and gas sector", - said A. Aydarbayev.

Satti Jackup is the first platform built entirely in Kazakhstan. It was built over three years under the American technology in two shipyards. The Jackup is suitable for drilling works in the Caspian Sea at the depth of 80 meters. Within the operation of the Jackup, its upgrade is provided that will ensure safe and efficient drilling of exploration wells to a depth of 6,000 meters. A Kazakhstan-Azerbaijani team of experts has been formed, which will be involved in drilling and provide technical support.

Let us recall, in February of 2019, KMG agreed on the transfer of the Jackup under trust management of SOCAR. On 14 June, subsidiary of KMG "NMSC "Kazmortransflot" began transportation of the Jackup from the port of Kuryk to Baku.

Upgrade of Kazakh Gas Processing Plant LLP

Thu, 13 Jun 2019 11:28:26 +0500

In view of publications in the media regarding the upgrade of the Kazakh Gas Processing Plant LLP (hereinafter as KazGPP) in Zhanaozen, NC KazMunayGas JSC (hereinafter as KMG) reports the following:

The issue of upgrade of KazGPP is under discussion. Currently, KMG is determining the ways and approaches for the implementation of the upgrade of the specified plant, as well as the funding that is required.

Therefore, information about the allocation of 107.2 billion tenge for the upgrade of the KazGPP for 2019-2022 is unverified and unreliable.

Detailed information on the upgrade of the KazGPP will be announced later.

KazMunayGas and Eni expand boundaries of their cooperation

Tue, 11 Jun 2019 12:02:41 +0500

On 11 June 2019, NC KazMunayGas (KMG) and Agip Caspian Sea B.V. (ENI S.p.A’s Affiliate, ENI) signed a Memorandum of Cooperation (MoC) further expanding the relations between two companies. The companies agreed to cooperate in three areas under the signed document: technological cooperation in hydrocarbon exploration and production, including sharing the advanced practices and know-how; explore the potential for co-development of exploration and production projects; implementation of training program for the KMG Group staff.

KMG and ENI are planning regular engagements to ensure the exchange of knowledge and experience in terms of drilling and completion of wells, integrated reservoir modelling, HC residual productive capacity, production increase etc.

We continue to work on strengthening a long-term cooperation between two companies and this Memorandum is another proof of expansion of boundaries of our cooperation. Successful interaction of the companies will address both production and learning processes, said Mr. Alik Aidarbayev, Chairman of the KMG Management Board.

Today we have discussed ENI/KMG joint projects and further prospects of our cooperation. Both companies expressed their intent to bring joint activities to a higher level, said Mr. Antonio Vella, ENI S.p.A Chief Upstream Officer.

I-P-2 Heads of Agreement signed between KMG and LUKOIL

Mon, 10 Jun 2019 10:19:05 +0500

7 June 2019, KMG CEO Alik Aidarbayev and LUKOIL President Vagit Alekperov signed I-P-2 Heads of Agreement as part of their participation in Saint-Petersburg International Economic Forum.

The document has been signed to formalize the negotiated and agreed partnership conditions and commitment to joint implementation of I-P-2 Project placed within the Kazakh borders of the Caspian Sea.

The parties now, as is statutorily required, plan to have the next negotiations round with the Ministry of Energy of the Republic of Kazakhstan to get mineral right for I-P-2 offshore operations. Signing of raw hydrocarbons exploration and production contract and joint venture foundation will be the next step the parties are supposed to take so as to start site operations.

The I-P-2 license block is located within the Kazakh borders of the Caspian Sea. Depth of the block water varies from 300 to 400m; distance to the shore line is 130 km. 2D seismic operations took place over the years.

«We welcome LUKOIL commitment to expand partnership with KazMunayGas and develop Kazakh section of the Caspian Sea. I believe that signing of the I-P-2 Heads of Agreement will further boost our bilateral partnership», – KazMunayGas CEO Alik Aidarbayev said.

Partnership between KazMunayGas and LUKOIL has strategic nature. The companies jointly develop the Karachagank, Tengiz, Kumkol projects and partner in the Caspian Pipeline Consortium – the oil transportation project.

1 April 2019, the Raw Hydrocarbon Exploration and Production Contract, covering Zhenis offshore operations, has been signed between the Ministry of Energy of the Republic of Kazakhstan, KazMunayGas and LUKOIL.

JSC NC KazMunayGas consolidated operating and financial results for the first quarter of 2019

Fri, 07 Jun 2019 10:06:46 +0500

Nur-Sultan, June 7, 2019 – JSC National Company KazMunayGas (“KMG” or “Company”), Kazakhstan's vertically integrated oil and gas company, announces its IFRS consolidated financial and operating results for the first quarter of 2019 according to IFRS (International Financial Reporting Standards).

Operating Highlights for 1Q 2019[1]:

Oil and gas condensate production was up 1.3% year-on-year to 5,939 thous. tonnes (495 thous. barrels of oil per day[2]);
Natural and associated gas production was up 4.7% year-on-year to 2,173 mln m³;
Oil transportation increased by 6.7% year-on-year to 19,660 thous. tonnes;
Gas transportation was down 3.6% year-on-year to 25.9 bln m³;
Refinery volume was up 1.1% year-on-year to 4,901 thous. tonnes. Volume includes refinery volume in Kazakhstan of 3,306 thous. tonnes and KMG International (“KMGI”) of 1,595 thous. tonnes. Total oil products production was up 0.9% year-on-year to 4,597 thous. tonnes;
Sales volume of crude oil produced by KMG was up 1.8% year-on-year to 5,922 thous. tonnes.

Financial Highlights for 1Q 2019[3]:

Revenue was up 20.5% year-on-year to 1,765 bln tenge (USD 4,673 mln);
Net profit was up 51.4% year-on-year to 309 bln tenge (USD 819 mln);
Capital expenditures were down 10.4% year-on-year to 73 bln tenge (USD 194 mln);
EBITDA[4] was up 27.1% year-on-year to 517 bln tenge (USD 1,370 mln);
Net debt was up 9.9% as compared to 31 December 2018 and amounted to 2,356 bln tenge (USD 6,200 mln).

Key corporate events:

On 22 February 2019, KMG EP completed their preferred shares buyback programme. In total, KMG EP repurchased preferred shares in the amount of 15.9 bln tenge, representing 65.0% of the outstanding shares. As of 14 May 2019, preferred shares of KMG EP were delisted from the KASE;
In February 2019, the sale of KMG Retail LLP for 60,512 mln tenge was completed;
In March 2019, international rating agency Fitch confirmed its rating at the level BBB-/Forecast stable”, while increasing the individual rating (stand-alone credit profile) from b to bb-;
On March 29, 2019, KMG obtained the consent of the holders of Eurobonds to be redeemed in 2022, 2023, 2027 and 2044. (Eurobonds issued before 2018) for (1) alignment of the covenant package with the terms of the issue of Eurobonds of 2018 and (2) early repayment of Eurobonds in the amount of USD 30.1 million due for repayment in 2044;
In accordance with a Presidential decree, KMG will fund the construction of a 7,000-seat stadium and congress hall in Turkestan for KZT 21 bln;
On 29 April 2019, Mr. Luis Maria Viana Palha Da Silva was elected as Board Member – Independent director of KMG;
On 20 May 2019, Mr. Anthony Espina was elected as Board Member of KMG representing core shareholder, JSC Samruk-Kazyna.

Operating results of 1Q 2019

Hydrocarbon production

During the first quarter of 2019 KMG oil and condensate production increased by 1.3% year-on-year to 5,939 thous. tonnes. Natural and associated gas production increased by 4.7% to 2,173 mln m³.

In the first quarter of 2019 Kashagan oil production was up by 25% year-on-year to 3,583 thous. tonnes or 316 kbopd. KMG’s share in Kashagan oil and gas production increased by 25% and 31.7% to 297 thous. tonnes of oil and 182 mln m³ of gas, respectively. The increase in oil production is with a result of the planned increase during the commercial development phase. From 14 April to 19 May 2019 Kashagan production was halted for planned total overhaul.

Oil production in Karachaganak decreased by 4.9% year-on-year to 271 thous.tonnes attributable to KMG’s share. Gas production amounted to 271 mln m³. A decrease of production is mainly attributable to high gas-condensate factor and increasing water-cut.

KMG’s share in the oil production of the Tengiz field increased by 2.4% year-on-year. KMG’s share was 1,521 thous.tonnes. Tengiz gas production increased by 1.7% year-on-year with KMG’s share amounting to 829 mln m³. The volumes were increased in line with production plan.

KMG’s share in operating assets’ production slightly decreased by 0.1% and amounted to 3,851 thous. tonnes. Decrease is primarily driven by natural decline of oil production.

Regarding participation in drilling projects in the Azerbaijani sector of the Caspian Sea, on 16 February 2019, the implementation of an investment project for the modernisation of a Jack Up Drilling Rig (JUDR) for 21.6 bln tenge or USD 57 mln. KMG and the State Oil Company of Azerbaijan Republic (SOCAR) signed an agreement on trust management of the JUDR.

On 1 April 2019, the Ministry of Energy of the Republic of Kazakhstan, KMG and LUKOIL Kazakhstan Upstream LLP signed a contract for the exploration and production of hydrocarbons in the Zhenis site located in the Kazakhstani sector of the Caspian Sea. The project operator is Zhenis Operating LLP (a 50/50 joint venture of KMG and LUKOIL).

Crude oil sales

During the first quarter of 2019, KMG’s share sales of oil and condensate produced by KMG increased by 1.8% year-on-year to 5,922 thous. tonnes including 4,322 thous. tonnes export volumes.

Own produced crude oil sales to the domestic market slightly decreased by 0.7% year-on-year to 1,600 thous. tonnes, including 714 thous. tonnes of crude oil volumes to refineries for further oil products sale.

Oil and gas transportation

During the first quarter of 2019, KMG transported 19,660 thous. tonnes of oil (including KMG’s share)[5] by pipelines, reflecting an increase by 6,7% year-on-year.

The main growth of oil transportation volumes is attributable to an increase in sea transportation, which is carried out by NMSK Kazmotransflot LLP (KMTF). In the first quarter of 2019, the volume of KMTF transportation was 2,856 thous. tonnes, which is 66.7% higher year-on-year. The growth is mainly due to an increase in the volume of oil transportation in the Mediterranean and Black Seas, attributable to the agreement signed at the end of 2018 on supply and transportation between KMTF, KMG and KMG I.

KMG’s share in Caspian Pipeline Consortium (CPC) oil transportation volumes increased by 8.2% year-on-year to 3,357 thous. tonnes due to the increase of the volumes at Kashagan field.

During the first quarter of 2019, gas transportation volumes decreased by 3.6% year-on-year to 25.9 bln m³ mainly due to a decline in transit gas volumes caused by the reduction in the supply of Uzbek gas and the redistribution of Russian gas flows of Gazprom. The decrease of Gazprom transit volumes has temporary nature because of unusual cold weather this winter in Russian regions that caused to redistribute Russian gas flows to supply increased demand in Russian domestic market.

Gas export volumes amounted to 6.5 bln m³, reflecting an increase of 15.2%, primarily due to gas export to China in line with the five-year gas sale five-year contract signed at the end of 2018 to double Kazakh natural gas exports to China from 5 bcm to 10 bcm per year.

On 16 April 2019, a ceremonial event was held at the Aktau seaport to open the feeder transportation on the Trans-Caspian international transport route and the first Kazakhstan feeder vessel called “Turkestan” was loaded with containers to the Baku seaport. The operator of this transportation is KMTF.

Refining

Refining volumes increased by 1.1% year-on-year to 4,901 thous. tonnes.

Refining volumes at Kazakhstan refineries increased by 2.0% year-on-year to 3,306 thous. tonnes in line with domestic supply obligations for oil producers:

1,263 thous. tonnes at the Atyrau Refinery, down 1.1%;
1,381 thous. tonnes at the Pavlodar Refinery, up 5.1%;
622 thous. tonnes (KMG’s share - 50%) at the Shymkent Refinery, up 4.0%;
41 thous. tonnes (KMG’s share – 50%) at Caspi Bitum, down 27.0%.

Refining at KMGI refineries slightly decreased by 0.5% year-on-year to 1,595 thous. tonnes:

Petromidia refining (Romania) volumes were down 0.7% to 1,516 thous. tonnes;
Vega refining (Romania) volumes were up 3.0% to 79 thous. tonnes.

In the first quarter of 2019 refining depth increased from 67% to 73% at Atyrau refinery,from 81% to 83% at Pavlodar refinery and from 74% to 77% at Shymkent refinery compared year-on-year[6].

Oil products production increased by 0.9% year-on-year to 4,597 thous. tonnes.

Oil products production at Kazakhstan refineries increased by 1.7% year-on-year to 3,038 thous. tonnes in line with growth in refining volumes:

745 thous. tonnes of gasoline, up 7.0%;
954 thous. tonnes diesel, up 10.1%;
128 thous. tonnes of jet fuel, up 234.7%;
1,212 thous. tonnes of other oil products, down 12.6%.

Oil products production at KMG I refineries decreased by 0.6% year-on-year to 1,559 thous. tonnes due to decrease in refining volumes:

402 thous. tonnes of gasoline, down 7.9%;
689 thous. tonnes diesel, down 0.2%;
93 thous. tonnes of jet fuel, up 38.9%;
375 thous. tonnes of other oil products, up 0.3%.

Financial results of 1Q 2019[7]

During the first quarter of 2019 revenue increased by 20.5% year-on-year to 1,765 bln tenge (USD 4,673 mln). The growth was mainly attributable to the increase in KMG I’s sales volume of crude oil, tenge depreciation against US dollar, and increase in gas export sales volumes. KMG I’s sale of crude oil amounted to 422 bln tenge (USD 1,118 mln). Sale of crude oil and LPG pursuant to Tengizchevroil (TCO)[8] Advanced Oil Sale transaction amounted to 405 bln tenge (USD 1,073 mln). During the first quarter of 2019 KMG has accelerated settlement of undertakings under the TCO prepayment in the amount of USD 160 mln on top of the adjusted scheduled settlement in the amount USD 247 mln.Gas export to China increased by 117% and amounted to 179 bln tenge (USD 474 mln).

Cost of sales increased by 20% year-on-year to 1,351 bln tenge (USD 3,577 mln). The increase is mainly attributable to the increase of crude oil purchases and tenge depreciation against US dollar. Cost of crude oil purchased by KMG I increased to 160 bln tenge (USD 423 mln). Cost of crude oil attributable to the TCO Advanced Oil Sale transaction amounted to 405 bln tenge (USD 1,073 mln).

During the first quarter of 2019, KMG’s operating profit increased by 26.7% year-on-year to 185 bln tenge (USD 489 mln).

KMG’s earnings from shares in the net profit of joint ventures and associates increased by 33% year-on-year to 219 bln tenge (USD 580 mln). The increase is mainly the result of share in profit reported of the Asia Gas Pipeline LLP in the amount of 31 bln tenge (USD 82 mln).

Net profit increased by 51.4% year-on-year and equaled to 309 bln tenge (USD 818 mln).

Taxes and other obligatory payments amounted to 371 bln tenge (USD 983 mln), reflecting an increase by 28% year-on-year.

Capital expenditures were reduced by 10.4%year-on-year to 73 bln tenge (USD 194 mln).

As a result of the collection of accounts receivables of KMG I and KTG (gas export sales to China) and organic cash utilisation for working capital, for the first quarter of 2019 KMG reported negative free cash flow adjusted in the amount of 66 bln tenge (USD 175 mln).

Gross debt as of 31 March 2019 decreased by 2.3% to 4,060 bln tenge (USD 10,682 mln), compared to 31 December 2018.

Cash and cash equivalents balance as of 31 March 2019 including cash in deposits decreased by 14.3% to 1,703 bln tenge (USD 4,482 mln) as compared with 31 December 2019 mainly due to prepayments settlement pursuant to TCO Advanced Oil Sale transaction.

As a result of TCO prepayments settlement, KMG’s net debt increased by 8.7% to 2,356 bln tenge (USD 6,200 mln).

During the subsequent period, in April 2019, KMG has paid around USD 62 mln to Eurobonds holders for alignment of the covenant package, out of which USD 30.1 mln represents early repayment of Notes 2044.

[1] Operating highlights are represented as net of KMG’s share in those respective assets.

[2] Average conversion rate of each asset was applied for information purposes only. The actual number of barrels may vary from the barrel equivalents of crude oil represented here.

[3] For reader convenience, amounts in US Dollars throughout the press-release were converted at the average exchange rate for the applicable period for amounts taken from the consolidated statement of income and consolidated statement of cash flows and the period-end rates for amounts taken from the consolidated balance sheet (average rates 1Q 2019 and 1Q 2018 were 377.73 and 323.22 KZT/USD, respectively; period-end rates as at 31 March 2019 and 31 December 2018 were 380.04 and 384.20 KZT/USD, respectively.

[5] Oil transportation volume takes into account the transportation volume of each individual pipeline company, including the operating share of KMG. Part of the volume of oil can be transported by two or three pipeline companies, and correspondingly these volumes are counted more than once in the consolidated volume of oil transportation.

[6] Starting from 2019 refining depth calculation methodology has been updated. Figures for 1Q2018 recalculated in accordance of new methodology.

[7] As of June, the KMG ceased to classify KMGI as a discontinued operation as participants had not completed sale and purchase agreement (SPA) procedures to sell a 51% interest in KMGI and the transaction was terminated. Accordingly, KMGI assets and liabilities were transferred from discontinued operations to continuing operations; comparative figures were adjusted in accordance with IFRS requirements.

[8] In 2016 KMG entered into long-term TCO crude oil and liquefied petroleum gas (LPG) supply agreement, which involve the prepayment. The total minimum delivery volume approximates 38 mln tonnes of crude oil and 1 mln tonne of LPG in the period from the date of the contract to March 2021.

For further information, please visit http://ir.kmg.kz/ru

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Key financial indicators for 2024[1] compared to 2023:

Operating results for 2024[10] compared to 2023:

Financial Highlights for 2024

Revenue

Share in profit of joint ventures and associates

EBITDA

Adjusted EBITDA

Net profit

Net profit adjusted for share in profit of JVs and associates

Operating expenses

Capital expenditures

Dividends Received from Joint Ventures and Associates

Free cash flow

Debt management

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Hydrocarbon reserves

Upstream

Production at Operating Assets

Production at Megaprojects

Oil transportation

Oil turnover

Trading

Downstream

Oil Product Production

About JSC National Company KazMunayGas:

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Key financial indicators for nine months of 2024[1] compared to nine months of 2023:

Operating results for nine months of 2024[11] compared to nine months of 2023:

Financial Highlights for nine months of 2024

Revenue

Share in profit of joint ventures and associates

EBITDA

Adjusted EBITDA

Net profit

Net profit adjusted for share in profit of JVs and associates

Cost of purchased oil, gas, petroleum products and other materials

Operating expenses

Capital expenditures

Dividends received from JVs and associates

Free cash flow

Debt management

Net debt

Cash and cash equivalents

Key corporate events from the beginning of 2024:

About JSC National Company KazMunayGas:

Key financial indicators for 2024^[1] compared to 2023:

Operating results for 2024^[10] compared to 2023:

Key financial indicators for nine months of 2024^[1] compared to nine months of 2023:

Operating results for nine months of 2024^[11] compared to nine months of 2023:

Key financial indicators for the first half of 2024^[1] compared to the first half of 2023: