National Company “KazMunayGas”

:
Priorities of Investment Policy in the Context of
Program for Development of the OIl and Gas Sector
in the Republic of Kazakhstan for 2010-2014

Astana, May, 2011

JSC NC "KazMunayGas" is the national operator for exploration, production,
refining and transportation of hydrocarbons
KEY BUSINESS AREAS:
 Oil and gas upstream
 Oil transportation
 Refining and sales

 Gas transportation and marketing
 Petroleum Industry Service

CAPITAL ASSETS:

2

3 tcm  Kazakhstan is in the world's top ten countries in terms of hydrocarbon reserves  Ranks next to the Russian Federation among the CIS counties.3 bn tons of oil  oil .3 tcm of gas 3 .Kazakhstan's Proven Oil & Gas Reserves World Oil & Gas Reserves Kazakhstan's proven oil & gas reserves are: Kazakhstan – 3.5.2 % 5.3 bn tons  gas . OPEC Saudi Arabia Iran CIS Iraq Kuwait UAE Venezuela RF Kazakhstan Kazakhstan – 3.3.2 % North America Eurasia (including RF) Africa Kazakhstan Central and South America Middle East (including Iran) APR Source: BP Statistical Review of World Energy 2010 3.

140 mn tons 1 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 10 20 30 Turkmenistan Denmark Gabon Thailand Republic of Congo Yemen Equatorial Guinea Syria Vietnam Australia Ecuador Sudan Malaysia Colombia Argentina Egypt Oman India Indonesia Qatar Azerbaijan United Kingdom Algeria Libya Kazakhstan Nigeria Angola Brazil United Arab Emirates Norway Kuwait 125 122 121 121 108 100 99 87 78 78 77 68 58 51 49 39 35 35 34 34 33 25 24 24 19 17 15 14 14 14 13 11 10 Venezuela Iraq 156 148 Mexico 189 China Canada Iran Saudi Arabia US Russian Federation 202 30 40 4 . mn tons 100 460 78 75 61 325 48 50 63 66 68 80 72 52 40 35 26 25 2020 .Production of Oil and Gas Condensate Globally and in Republic of Kazakhstan Oil production in 2009. mn tons 494 Oil production in the Republic of Kazakhstan.

Strategic Development Objectives of JSC NC “KazMunayGas” JSC NC "KazMunayGas" set the goal of joining the world's 30 top oil and gas companies in terms of reserves and oil production. strengthening its positions in the oil refining and oil products marketing sectors and the gas business. Oil reserves (mn tons) Transportation of oil (mn tons) and gas (bcm) Oil production and refining (mn tons) Petrochemicals production (thousand tons) 5 .

6 .81%) Жамбай (50%) Курмангазы (50%) Сатпаев (75%) Аташский (50%) Жамбыл (73%) Тюб Караган (50%) Жемчужины (25%) Проект Н (51%) Хвалынское (25%) Центральная (50%) Геологоразведочные проекты на суше реализуются собственными силами АО НК «КазМунайГаз» и ДЗО без участия стратегических партнеров.Exploration Projects of JSC NC "KazMunayGas" Caspian Sea Land СевероКаспийский проект (16.

as well as highlighting new areas for raising exploration. According to the results of work an exploration program will be adjusted and a long-term dynamics of hydrocarbon production will be established.The project "Integrated study of Sedimentary Basins in the Republic of Kazakhstan" Project objective: analysis of petroleum potential of 15 sedimentary basins in Kazakhstan. 7 .

Caspian Pipeline Consortium NCP .Kazakhstan Caspian Transportation System 8 .North-Caspian Project KCTS .Kazakhstan-China oil pipeline CPC .5 MMtpa 20 0 2009 2010 Atyrau-Samara * * 2011 2012 CPC 2013 * 2014 Kazakhstan-China * 2015 2016 2017 port of Aktau * 2018 2019 2020 KCTS (Yeskene-Kuryk) KCP .Export Resources of Kazakhstan's Oil and Transport Capacity up to 2020 140 YeskeneKuryk based on the NCP requirements 120 100 MMtpa 80 60 KCP expansion up to 20 MMtpa 40 CPC expansion up to 52.

2 49.9 Phase 1 2012 40.1 bn USD Main source of finance . RoK volumes .75% Financing of the CPC Expansion Project    Expansion Project costs .5% Oryx .5.2% Exxon – 7.29.15% BritishGas – 2% Lukarco – 12. The beginning of construction under the CPC Expansion Project is planned for 2011  36 mn tons/year.5 9 .75 % Chevron .6 33.10 tanks with the volume of 100000 cubic metres each Number of SPMs .9 mn tons/year  CPC shareholders: RF's government– 24% CPC Company (RF) – 7 % RoK's government – 19% KPV – 1.15 Tank farm of the Sea Terminal . incl. Expansion Project Implementation Phases Phase Commissioning (year) CPC's total capacity (MMtpa) Capacity from RoK (MMtpa) EPC 2001 36 29.5 Phase 2 2013 61.1.CPC Pipeline Expansion Project  Oil pipeline length: 1.CPC's own funds.3 bn USD annually.2.3 Phase 3 2015 67 52.3 Projected tariff proceeds .5% Agip .5% KMG – 20.510 km  Commissioning: 2001  Actual throughput capacity (2010):  15 December 2010 CPC shareholders made the Final Investment Decision on the CPC Expansion Project.75% RosneftShell – 7. CPC oil pipeline parameters after expansion     Number of pump stations (PSs) .4 bn USD To the CPC system expansion in the RoK .

1 million tons per year By 2020 the fleet on the Caspian Sea is going to be increased to:  10 oil tankers DWT 12-13 thousand tons.more than 10 million tons per year 10 . it is planned to purchase 2 oil tankers of Aframax class DWT 80.000 tons.Marine oil transportation Formation and development of a national commercial fleet The existing fleet on the Caspian Sea::  6 oil tankers DWT 12-13 thousand tons.6. the volume of freight traffic .5 million tons per year 5 tugs and 8 barges.2 million tons per year In perspective it is planned to increase the fleet size up to 4 Aframax tankers and / or Suezmax.5. the volume of freight traffic . the volume of freight traffic . the volume of freight traffic more than 2 million tons per year Perspective directions of marine transportation development in the Black Sea: In 2011. the volume of freight traffic .1.more than 10 million tons per year  10 tugs and 16 barges. the volume of freight traffic .

Layout of Main Gas Pipelines of Republic of Kazakhstan Оренбургский ГПЗ ка тай» нит 3-я ан – Ки ст азах К « Г М 11 .

% 50 35 Sulfur.59). and bring the quality of motor fuels to Euro-5.2 10.16 10 7.индекс "Нельсона" The average complexity index of the RoK refineries is 4.42 8 6 4.67.31 4. % 5 1 Aromatics. ppm 500 10 Implementation of the State Program for Boosted Industrial-and-Innovation-Based Development and the Program for Development of the Oil and Gas Industry of the Republic of Kazakhstan for 2010-2014 will make it possible to: •increase the average complexity index of Kazakhstan's refineries to the global indicator of 10. 12 .5 Europe Euro – 5 Russia Euro – 2 Kazakhstan Euro .67 4 Motor fuels quality USA Euro . Composition Euro-2 Euro-5 Benzene.2 •increase the processing depth to 90%.2 2 0 USA Europe Russia Kazakhstan � .Targets of Modernizing Domestic Refineries Average complexity indicators of RoK refineries 12 10. which is lower than the world average (6.

thousand tons Name Petrol Diesel Jet fuel 2010 (fact) 3.900 700 Table 3 Potential ("-" .500 6. after the upgraded facilities of the RoK refineries are commissioned.200 5.imports.000 6.580 3.680 2. thousand tons Name Petrol Diesel Jet fuel 2010 (fact) -730 +98 -76 2016 +947 +441 +283 2020 +485 +95 +243 In 2016.100 600 2020 6.950 550 2016 5.541 883 2020 19. the output oil products will fully satisfy the domestic requirement for POLs 13 .685 5.995 943 Table 2 Forecast of oil products consumption.exports)."+" .047 479 2016 17. thousand tons Name Oil Refining Petrol Diesel Jet fuel 2010 (fact) 13.Balance of Production and Consumption of Oil Products until 2020 Table 1 Forecast of oil refining and oil products production.849 4.147 5.200 5. approved by the RoK Ministry of Oil and Gas.

commercial production of which has been set up in Kazakhstan as part of the Program implementation 360 286 301 314 321 325 2008 2010 250 230 155 170 140 120 100 20 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2009 2011 план Kazakhstan partners of the KazMunayGas group of companies under the Program 14 . Amount. % KZT bn KZT bn 425 75 1 244 65 Number of oil and gas equipment. KC.Kazakhstan Content in the Purchases of JSC NC "KazMunayGas" Group of Companies in 2010 Goods Works Amount. Amount. % KZT bn KZT bn 425 57 393 63 «Program for Assistance to Development of RoK Oil and Gas Mechanic Engineering and Setting-Up Production of New Types of Oil and Gas Equipment for 2011-2013» Services Total amount. % KC. KC. % KC. machinery and materials items.

Program of JSC NC "KazMunayGas" for Development of Kazakhstan Content for 2011-2015 Principal Goals and Objectives of the Program Assistance to the domestic goods producers in organizing output of new types of commercial products currently imported Increase in the purchased volumes of products.5 bn tenges to 35 bn tenges 2 Bringing the KC share in KMG group's purchases of goods to 50% or a 1.6 increase from 242 bn tenges to 387 bn tenges 3 Bringing the KC share in KMG group's purchases of works and services to 90% or a 1. or from 28. set-up for commercial production in prior years and output serially now Increase in the Kazakhstan content in the implementation of major oil and gas projects Establishment of the business development center Organizing service and machine-manufacturing assets Expected outcomes of implementing the Program 1 23% gain in production of oil and gas equipment in the RoK plants by 2015 as compared to 2010.3 increase from 565 bn tenges to 740 bn tenges 4 Increasing the KC share in the purchases of the operators of major oil and gas projects 5 Establishment of new joint ventures. KMG's service and machine-building assets 15 .

being implemented .Development of Coastal Infrastructure of the Kazakhstan Sector of the Caspian Sea Facilities in accordance with the Integrated Plan for Development of the KSCS Coastline: Atyrau Причал отгрузки каменной породы 1 1 Bautino Полигон 2 3 4 5 6 БПМНО 7 8 4 5 6 7 8 9 3 9 СЗМС 2 10 11 12 14 15 13 Завод по ремонту малых судов 16 17 21 18 20 19 13 14 15 16 17 18 Завод буровых растворов Rock loading jetty Disposal site Offshore Oil Operations Support Base Sea Vessels Fuelling Station Production base of Agip KCO* KazMi drilling muds plant "Atash" Offshore Oil Operations Support Base* Small vessel repair and overhaul plant* TenizService Production site 12 11 ЛЭП North-Caspian Environmental Response Base 19 20 21 Aktau Keppel Kazakhstan Shipyard* KCOI Shipyard* Kuryk Yersai Shipyard* Oil Terminal Shipyard/Dry Dock Fleet base Offshore Oil Operations Support Base Disposal site Industrial supply base Fabrication yard Concrete weight coating plant .implemented facilities .planned facilities *.projects of foreign companies 16 .

17 . in order to develop its concept. a working group was created among the experts of JSC NC “KazMunayGas”. as well as representatives of concerned government agencies and oil companies.Атырау Location: Atyrau oblast. southward to the village Damba Implementation period: 2010-2012 Project cost: ~ 13.8 billion tenges Source of financing : JSC NC “KazMunayGas” The main facilities: berth and mooring basin / spill prevention equipment storage building / service facilities for air-cushion vehicles (ACV) / Rehabilitation Center for Animals / Centre for Environmental and Meteorological Monitoring / helipad Given the urgency and public importance of establishing a National system for detecting and responding to oil spills. canal Primorskiy.The Northern Caspian Ecological Response Base (NCERB) Purpose: the Center for oil spills response in the development of offshore fields o г. “Nymphea Environment”. JSC “KazGeoKosmos”. initiated by JSC NC “KazMunayGas".

JSC production at domestic Chemical Science" enterprises  JSC "D.V.B. Sokolsky Institute of Organic Catalysis and  Specialized laboratory of JSC Electrochemistry" “Kazakh Institute of Oil and Gas”  JSC “Kazakh Institute of Oil within SEZ “Information and Gas” : Technology Park”  Research center within special economic zone (SEZ) “Information Technology Park” Market promotion of finished goods  Large oil and gas companies of Kazakhstan:  TCO  KPO  NCP and others  Export Under Development Plan of JSC NC “KazMunayGas” provisions were provided for the development of innovative projects by JSC “Kazakh Institute of Oil and Gas” totaling $ 45 billion tenges for the period of 2011-2015. 18 .Innovative cluster Research and development Pilot testing Production management  Polygon based on low productive  Setting up serial  JSC “KBTU":  JSC "A. Bekturov Institute of oil fields of KazMunaiGas EP.

mln KZT 2020 11 491 2015 2010 8 906 122 Labor productivity gains of KMG through innovation (consolidated. million dollars 372 2020 286 2015 2010 149 215 29 5 521 315 220 19 . thousand dollars per person) Additional revenue of KMG through innovation.Innovation and Technology Policy Research and development expenses of KMG.

млн.Investment Program of JSC NC "KazMunayGas" Capex per business segment Production Oil transportation Gas Transportation Downstream KMG NC Misc.4 billion US dollars. USD 6 000 133 422 5 000 4 000 2 066 159 192 1 740 3 000 1 046 2 000 267 1 000 149 252 129 249 139 566 1 047 1 053 734 288 1 322 1 841 1 553 91 145 939 591 163 810 389 145 812 2011 2012 2013 2014 2015 -  The capital expenditures over the period from 2011 to 2015 will total around 19. 20 .

since it is based on the studies of the complex structure of professional activities” EU Experts’ Opinion on Occupational standards of KMG 21 . Key objective of the pilot project: development of unified up-to-date requirements to qualification and competencies of employees in various occupations. but also for settlement of the issues of foreign labor import.26 Individual development sheet of an employee Expert appraisal of the Company Specializations Occupational Standards Skills. 55 Occupational Standards have been developed (about160 positions): Office and management personnel/Engineering technicians. personnel nationalization and fair remuneration taking into account business interests and labor market realia. “. the Ministry of Labor and Social Affairs of the RK. Organization of HR work in terms of OS Employment of personnel Personnel development Personnel training plan Motivation system Remuneration system Formation of the Company’s Candidates pool Occupational standards allow not only for qualitative HR management.. experience Distinct requirements Employees’ tasks Business processes Occupational standard is a code of requirements to qualification and competences of a certain occupation.29 Workers . KMG’s method of occupational standard development is essentially notable for its innovative approach. “Atameken” Union and KMG’s specialists. The working group was composed of representatives of the Ministry of Education and Science.Contribution of JSC NC “KazMunayGas” to the development of the National Qualifications Framework In 2009 KMG initiated a pilot project within the framework of “KAZENERGY” Association’s activity on development of the Occupational standards in the oil and gas industry..

19 Kabanbai batyr Ave.Thank you for your attention! JSC “ National Company “ KazMunayGas” Republic of Kazakhstan 010000.kz 22 .kz http://www. Astana. Tel.kmg.: +7 (7172) 97-61-01 Fax: +7 (7172) 97-60-00. 97-60-01 e-mail: Astana@kmg.