UNECE Energy Week “Investing in Energy Security” 16th Session Committee on Sustainable Energy

NationalNational CompanyCompany ““KazMunayGasKazMunayGas ””:: ContributionContribution toto EnergyEnergy SecuritySecurity

Palais des Nations, Geneva 1 28 November 2007 «Currently we should focus on diversification and ensure of sustainable routes of energy resources supply from Kazakhstan to global markets».

President of the Republic of Kazakhstan Nursultan Nazarbayev

Main components of JSC NC “KazMunayGas” activity in global energy security:

I. Development of hydrocarbons resource base

II. Expansion of existing transportation routes and creation of a new ones

III. Development of refining and oil chemistry in compliance with international demands

IV. Implementation of modern standards of corporate governance

2 Position of Kazakhstan in world oil & gas industry

World’s oil reserves by countries, bln. bbl / bln. tons 264 36,3

138 18,9 115 15,5 102 98 14,0 13,0 80 79 11,5 10,9 42 38 36 30 5,5 5,5 17 16 4,9 3,7 15 14 2,4 2,2 12 12 10 9 7 2,0 1,7 1,5 1,7 1,1 1,2 1,0 Iran Iraq UAE USA Brazil Libya Qatar China Kuwait Angola Russia Nigeria Mexico Algeria Algeria Norway Canada Venezuela Azerbaijan Azerbaijan Kazakhstan Saudi Arabia Saudi Kazakhstan: 9th place among all countries of the world 2nd place among non-OPEC countries 3 DynamicsДобыча нефтиof main иindicators газового of конденсата the JSC NC “KazMunay в КазахстанеGas”

Oil and gas condensate production

Thousand bbl / day 400

343 290 300 258 259 152 226 99 213 79 71 200 68 65

100 179 188 191 191 148 158

0 2002 2003 2004 2005 2006 2007 (plan)

JSC NC “KazMunayGas" JV share

Unit of Indicator measurement 2002 2003 2004 2005 2006 2007 Oil and gas condensate Thousand 10 646 11 327 12 886 12 966 14 503 17 162 production tons

4 Transit & transportation hydrocarbon potential of Kazakhstan

Diversification of oil transportation routes

Primorsk RUSSIA

Butinge Lithuania Gdansk Belarus

Atyrau-Samara Eskene-Kuryk ASTANA GERMANY POLAND UKRAINE Atasu-Alashankou KAZAKHSTAN Atasu CPC Eskene Kenkiyak Kumkol ROMANIA Tengiz Kashagan Alashankou Makhachkala Novorossiysk Aktau Kenkiyak-Kumkol BLACK SEA BULGARY Kuryk Uzbekistan Supsa Kyrgyzstan BTC Baku TURKEY KCTS Turkmenistan CHINA Ceyhan Neka

MEDITERRANEAN IRAN

Existing routes

Planned routes

5 Transit & transportation hydrocarbon potential of Kazakhstan

Diversification of gas transportation routes

Russia

Central Asia - Center

Bukhara - Ural "Soyuz" (Orenburg - Novopskov) Kazakhstan

Makat - Northern Caucasus

To Europe Kazakhstan - China

Transcaspian Nabucco Gazli - Shymkent Pricaspian Bukhara - Tashkent - Bishkek - Almaty Turkmenistan Baku - Tbilisi - Erzurum

Existing routes Planned routes

6 Expansion of business geography

Acquisition of foreign assets

 Acquisition of the assets of JSC “Tbilgazi” The enterprise is the operator of gas supply in Tbilisi, Georgia Total length of gas pipelines is 2 414 km.

 Creation of a JV on the basis of the Batumi oil terminal This terminal is the first foreign oil transportation asset of the Republic of Kazakhstan with a direct access to the world ocean

 Creation of a JV with OJSC “” on the basis if the Orenburg Gas Refinery Agreement between the Government of the RK and the Government of the RF on cooperation In creation of a business entity on the basis of the Orenburg Gas-Processing Plant of 3 October 2006. Agreement on conditions of transportation and supplies of processed gas to the domestic market of the RK between JSC “NC “KazMunayGas” и ОJSC “Gazprom” of 3 October 2006.

7 Refining and petrochemistry development

Refining capacity

The 1 st stage of reconstruction of the Atyrau Refinery was completed in 2006 . Output of a wide range of high quality products answering to the European standards was mastered.

This year KazMunayGas has acquired the right of parity management of the Shymkent Refinery. It is planned to implement the up-to-date production standards.

8 Refining and petrochemistry development

Acquisition of 75% share of the Rompetrol Group NV

In August of this year, KazMunayGas acquired 75% of the shares in The Rompetrol Group NV. The assets of this company include: - 2 refineries; - 630 FSs in seven European countries.

9 Refining and petrochemistry development

Petrochemistry projects in Kazakhstan

The first petrochemical complex in Atyrau oblast Products: polyethylene, polypropylene Capacity: 800 thousand tons of polyethylene, 400 thousand tons of polypropylene Location: Karabatan station in Atyrau oblast Completion time: 2012

Production of road asphalt Products: road asphalt Capacity: 420 thousand tons Location: Aktau Plastic Plant in the city of Aktau Completion time: 2009

Aromatic Hydrocarbons Complex Products: basic petrochemical stocks – benzene, paraxylene Capacity: 130 thousand tons of benzol, 500 thousand tons of paraxylene Location: Atyrau Refinery (the city of Atyrau) Completion time: 2011

Total Investments – USD 6 bln.

10 Implementation of effective forms and methods of corporate governance

 Implementation of international standards of financial reporting

 Compliance with ISO 9001, ISO 14001 international standards and OHSAS 18001 specifications

 Gaining of investment rating reflecting the efficiency and transparency of activity

 Entrance to the international stock market

 Balanced Scorecard implementation

 Implementation of best practices in the field of corporate governance

 Constant professional development of specialists

11 Environmental protection

Corporate system of ecological monitoring

Main goals of the corporate system of ecological monitoring:  Obtaining updated information on the current environmental status for making adequate managerial decisions  Creation and updating of data base on environmental status  Reporting automatization

EP & LP - IT Dept. Corporate system of ecological Contract Dept. monitoring of JSC NC “KazMunayGas”

Reports to . aroused a great interest of the State bodies UNECE, which positively estimated Reports Interpretation Data Reports an approach of the Company Base Reports Reports to organization of the internal system Monitoring Monitoring data DDZ acceptance Data of ecological governance, Отчеты Операторов KazGeoKosmos development of the subsystem JV’s - PSA - departments. Dep-s KMG EP KTO ICA KMTeniz of ecological monitoring of the corporate geological informational Reports Reports system with great perspectives of its Operator Operator implementation at the companies РД КМГ РД КМГ Instrumental data РД КМГ of other countries.

Objects of monitoring

12 Thank you for your attention!

Contact info:

JSC «National Company «KazMunayGas» 22, Kabanbay Batyr Ave, Astana, 010000, Republic of Kazakhstan tel.: +7 (7172) 97 61 01 fax: +7 (7172) 97 60 00, 97 60 01 e-mail: [email protected] http://www.kmg.kz

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