MINISTRY OF ENERGY OF THE REPUBLIC OF KAZAKHSTAN

Special Economic Zone “NIPT” BRIEF INTRODUCTION

«Among the CIS countries, Kazakhstan has become a leader in attracting foreign direct investment, as well as in a number of other positions»

President of the Republic of Kazakhstan – Kassym-Zhomart Tokayev MINERALS AND ENERGY RECOURSES

KAZAKHSTAN TAKES THE 6TH PLACE IN THE WORLD ON MINERALS RESERVES, AS WELL AS:

World Ranking Production 1 place — on the explored reserves of zinc, tungsten and barite by stocks of raw materials 2019 2 place — on the explored reserves of silver, lead and chromites

3 place — on the explored reserves of copper and fluorite Oil 90,4 million tons 12 Export 72,4%

3 Gas 15 56,4 bln. m Export 34%

22,7 thousand tons Uranium 2 KAZAKHSTAN’S RANKING AMONG THE CIS COUNTRIES ON Export 100% THE VOLUME OF MINERALS RESERVES:

Coal 8 115,4 million tons 1 place — on chrome ores and lead Export 31% 2 place — on oil, silver, copper, manganese, zinc, nickel and phosphoric Primary raw materials Generation of electricity electricity of renewables (renewables) - 2,2% 3 place — on gas, coal, gold and tin

4 place — on the explored reserves of molybdenum 3.6% of the world's primary energy reserves 6 place — on the explored reserves of gold OPPORTUNITIES IN PETROCHEMICAL INDUSTRY

Polyethylene Polyethylene terephtalate Cycloxane Polypropylene «KLPE» «Almex Petrochemical» KazhimProduction «Neftehim LTD» 1,250 mln tonns 430 th.tons 150 th. tonns 70 th. tonns

World Ranking Production by stocks of raw materials 2019 Polypropylene «KPI» 500 th. tonns 90,4 million tons Nur-Sultan Pavlodar Oil 12 Export 72,4%

3 Gas 15 56,4 bln. m Export 34% Atyrau Uranium 2 22 ,7 thousand tons Export 100% Aromatic Coal 115,4 million tons Hydrocarbons 8 630 th.tonns Taraz Export 31% Almaty Primary Aktau electricit Generation of Shymkent y of renewabl electricity es (renewables) - 3.6% of the world's 2,2% Lubricants primary energy reserves Lubricants Lukoil Methanol & Olefins «Hill Corporation» 100 th.tonns WestGasOil Pte. 30 th. tonns LTD 1,5 mln tonns Operating Urea Polyprolene & ETBE Base OIl Urea UCC Under Construction ShKH «Hill Corporation» KazAzot 850 th.tonns 150 th. tonns 450 th. tonns Perspective 300 th.tonns BUSINESS-FRIENDLY ENVIRONMENT

Kazakhstan is 25th in the World Bank’s Ease of Doing Business Ranking and among the most improving economies

New Zealand 1 #4 for enforcing Singapore 2 THE MOST FAVOURABLE TAX REGIME IN THE REGION* contracts UAE 16 Ireland 24 Kazakhstan 25 #7 for minority investors’ Russian Federation 28 Kazakhstan - 29.4 % protection Spain 30 China 31 Switzerland 36 Russia - 46.3 % 4 easy steps to start a business Netherlands 42 in just 5 days (#22) Belarus 49 Ukraine 64 Uzbekistan 69 Uzbekistan - 48.17 % 3 easy steps to register property Qatar 77 in just 3 days (#24) Republic of Kyrgyzstan 80 China - 64.9 % Just 100 days to receive Source: World Bank, all construction permits (#37) Doing Business 2020 *total tax and contribution rate (% of profit) SPECIAL ECONOMIC ZONES

Samruk-Kazyna JSC and the Government of RoK approved the development and financing of two Special Economic Zones - National Industrial Petrochemical Technopark. Located in Atyrau region (Western Kazakhstan);

TAX INCENTIVES

. Corporate income tax – 0% . Land tax – 0% . Property tax – 0% . Social Tax (for 5 years) – 0% . Exemption from the VAT

EXEMPTION FROM CUSTOMS DUTIES

For goods . Imported into the SEZ territory . Exported* from the SEZ territory to the Customs Union

NON-FISCAL INCENTIVES

. Free plot of land for the entire period of existence of a SEZ . Simplified procedure for employment of foreign labor SEZ NIPT ATYRAU

• Period: 2007 – 2032 • Location: Atyrau Region General Information • Total Area: 3475 ha • Shareholder: - Ministry of Energy of the Republic of Kazakhstan - United Chemical Company LLP

• Distance to Atyrau city – 42 km. Location • Distance to highway – 5 km • Railway access to the Russia, China and Central Asian countries.

Gas supply Raw minerals in the region Feedstock • TCO – Dry gas (Tengiz oil field) . 4,5 billions tons of oil • NCOC- LPG (Kashagan oil field) . 2,0 trillion m³ of natural gas.

Completed Utilities Industrial Infrastructure – under construction • Gas-turbine Power plant - 310 MW • Water treatment system – 15 000 m3/day (1st stage) • Access rail road -15,6 km. 46 000 м3/day (2nd stage) Infrastructure • Railway station • Industrial gases – Nitrogen: 7 000 m3 (1st stage) • Access automobile road - 5,3 km. 28 500 m3 (2nd stage) • Grid connection-110-kV and 220-kV • Power Substation -110/35/10 kV and 220 kV

Development of a conceptual Master-plan, Consulting services including a market research review, designing of a land-use plan and a SEZ infrastructure plan 463,7 ha 285 ha 336 ha 3 475,9 ha 2391 ha 1084 ha Karabatan Technopark Reserve SEZ Area infrastructure projects INFRASTRUCTURE site site (Karabatan)

COMPLETED INFRASTRUCTURE (for functioning of the current projects and construction of polypropylene production project)

Power plant Flyover 110 kV & 220 kV Substation and PL’s Railroad station Access railway, Access road Output – 310 MW Capacity - 3668 auto/d Length: PL 110 kV – 38,5 km, Length – 6,8 km. «Karabatan» st. extension Length - 5,3 km. PL 220 kV – 42 km Capacity – 2,3 млн. t/y. Length – 15,4 km. Capacity – 12 MW ON-GOING INFRASTRUCTURE (1st stage - for starting the polypropylene production) Production infrastructure General infrastructure Other facilities: • Weighbridge and X-ray unit • Engineering communications

Water treatment plant Customs checkpoint Evaporator pond Internal roads • Landscaping 3 State budget Capacity – 15 th. m /d Area– 260 m2 Quantity – 2 cells Length – 3,1 кm. Progress – FS developed (78 ha)

N2 O2

Private Industrial gases unit Gas station Solid waste landfill Laundry Output – 35,5 th. nm3/h Fire station investments 3 units Area – 17 ha. Capacity – 500 kg/d. Progress – Detailed design for 6 cars

INFRASTRUCTURE EXTENSION (2nd stage – ensuring the functioning of the polyethylene production and others)

Other objects (Karabatan): • Engineering networks and structures • Parking for 34 and 42 cars • Security video surveillance • Landscaping • Lighting Gas Separation Unit Water treatment plant Internal railroads Administration Output – 7 bln. m3/y. extension Length - 1,1 km. building 3 Output – 45 th. m /d Area – 3 077,4 m2 New opportunities

The government provides support in providing feedstock to Amendments were made to the Law of the Republic of strategically important investment projects for the Kazakhstan "On Gas and Gas Supply" in part: production of petrochemicals with high added value

CURRENT GAS BALANCE BLN M3 • Granting the right to purchase liquefied petroleum gas to industrial consumers using it as a raw 40 38.7 38.8 material for the production of petrochemical 35 31.7 products, for which state price regulation will be 29.1 30 27.8 implemented 23.5 24.4 24.6 24.8 25 20 17.1 • Establishing a commodity gas pricing mechanism for 15 investment projects that use gas as a raw material 10 producing petrochemical products, according to the formula: cost of gas supply plus the minimum rate of 5 marginality for a national operator (7%). 0 2020 2025 2030 2035 2040

Production Consumption PROJECTS

IMPLEMENTATION PROJECTS CAPACITY PERIOD PARTNERS STAGE

Polyethylene 1 250 KTA 2018-2025 Feasibility Study New Strategic Partner

Polypropylene 500 KTA 2017-2021 Construction National Operator

. BOPP – 10 KTA Looking for partners/ Polymer Production . PE film – 4 KTA 2012-2015 Operation . PP bags – 24 mln. pcs. Under Due Diligence

300 th.tons methanol Methanol to Olefins 2019-2024 Feasibility Study Looking for partners 600 th.tons olefins

Urea Production 850 th.tons 2017-2024 Feasibility Study Identified

Base oils 450 th.tons Base oils 2017-2022 Deal structuring Looking for partners

Production of ammonia 300 th.tons 2019-2023 Exploration Looking for partners

Processing Industry Projects Support (1) Fiscal Signing a priority Placement of the project in the investment contract * Special Economic Zone ** Exemption from VAT on the import of equipment • Corporate income tax • Investment contract • Land tax • Offset Method (3) Subsidies and Refunds • Property tax 0% According to the approved list Support for Industrial and • Customs duties VAT refund / Duties Innovative Activities exemption • 100% when exporting products to * Exemption for 8 and 10 years ** Exemption for the duration of the SEZ foreign markets 1. Providing State Support aimed at increasing • 100% duties exemption upon signing an Labor Productivity and developing territorial investment contract clusters (max amount of support is 40%, but not (2) Financial Measures more than 60 million tenge); 2. The provision of innovative grants for: -commercialization of technologies (50%, but not Preferential Project Co-financing Small and Medium Business more than 200 million tenge); Financing -technological development of existing companies State funds are included in the share of (70% under a License Agreement and 50% for the Private banks the project up to 50% in KZT purchase of equipment, but not more than 400 (second-tier banks) under the million tenge); Economics of Simple Things -technological development of industries (70% Program under a License Agreement and 50% for the purchase of equipment, but not more than 500 • Interest rate: from 8% in KZT million tenge); • Loan amount: from 7 billion KZT • Rate: 5% in KZT 3. Reimbursement of a portion of the costs related (≈ $ 18 million) • Duration: up to 7 years Other forms of to promoting domestic processed goods in the • Loan term: 20 years • Loan guarantee: from Financial Support foreign market; • Grace period: up to 24 months 4. Reimbursement of a portion of the costs related 20 to 50% • Export financing • Share of own participation: from to promoting domestic processed goods, works • Loan insurance 20% and services (in the domestic market). • Collateralized liquid assets: from • Co-financing the development 30% of a Feasibility Study for the bank E.O.D

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