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KMG fulfilled its obligations early under the TCO advance oil financing transaction

04.12.2019

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).

JSC NC KazMunayGas

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).
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