About the Company

Joint Stock Company “National Company “KazMunayGas” is a unique vertically integrated oil and gas operator that implements the full production cycle from exploration and production of hydrocarbons, their transportation and processing to provision of specialised services.

KMG was established pursuant to Decree No. 811 of the President of the Republic of Kazakhstan (hereinafter, the RoK) dated 20 February 2002 on Measures to Further Pursue the State Interests in the National Oil and Gas Sector, and RoK Government Resolution No. 248 dated 25 February 2002 on Measures to Enforce Decree No. 811 of the RoK President dated 20 February 2002. KMG is the legal successor of closed joint stock companies National Oil and Gas Company “Kazakhoil”, National Company “Oil and Gas Transportation” and joint stock company “KazMunayGas – Refining and Marketing”. KMG was founded by the RoK Government represented by the State Property and Privatisation Committee of the RoK Ministry of Finance.

KMG shareholders are Samruk-Kazyna Sovereign Wealth Fund Joint Stock Company (hereinafter, SamrukKazyna JSC) (90.42%) and National Bank of Kazakhstan Republican State Enterprise (9.58%).

KMG Group includes 110 companies with fifty or more voting shares (participation interests) directly or indirectly owned by KMG, of which 56 companies are located in the RoK.

The remaining assets are located in such countries as Romania, Georgia, Switzerland, Netherlands, Canada, Bulgaria, Moldova, Russia, Turkey, UK, UAE, British Virgin Islands, Marshall Islands, Bahamas, Bermuda.

Reduction of legal entities in the Group, including by means of liquidation/reorganisation of sub-holdings, is pursued under privatisation and divestment programmes.

In 2020, the Government of the Republic of Kazakhstan approved a new 2021-2025 Comprehensive Privatisation Plan (Decree No. 908 of the RoK Government dated 29.12.2020), which involves the withdrawal of 48 (forty-eight) KMG companies, 22 (twenty-two) of which are also included in the Divestment Programme.

On 9 December 2021, KMG’s Board of Directors (Minutes 19/2021, item 28) amended the approved List of Non-Strategic Assets of JSC NC “KazMunayGas” (Divestment Programme) dated 04 November 2021, which involves divestment of 47 companies from 2021 to 2025.

KMG shareholders:

On 9 November 2021, under conditions of the sale and purchase agreement dated 3 November 2021 between KMG and Samruk-Kazyna JSC (hereinafter, the Fund) for 100% of ordinary shares of KTG, the shares of KTG were transferred to the Fund.

PRODUCTION VALUE CHAIN

In this regard, 14 companies were divested from KMG:

A 25% participation interest in Butadiene LLP was acquired in order to jointly implement a rubber production project with Tatneft PJSC.

Overall in 2021: 20 companies sold, 6 companies liquidated, 1 company acquired.

Export of Oil Products Derived from KMG Resources Broken Down by Share and Supply Destination

JSC NC “KazMunayGas” (hereinafter, KMG) ships diesel fuel for field agricultural activities and supplies fuel oil to social and production facilities and institutions during the heating season.

The remaining oil product volumes are sold to third-party consumers on the domestic market and for export.

KMG exported diesel fuel (57,000 tonnes) in Q1 2021. 79% decrease in light oil product exports versus 2020 is due to increased consumption in RoK domestic market.

The structure of oil product exports in 2021 was dominated by shipments of dark oil products to Europe. Diesel fuel, petrochemicals, coke, sulphur and butane were supplied to Europe, China, Nigeria, Russia, Uzbekistan and Tajikistan.

In 2021, KMG purchased oil from four oil producing subsidiaries located in Western Kazakhstan for further processing at three refineries (Atyrau Refinery in the west, Pavlodar Refinery in the east and PKOP LLP (Shymkent) in the south of the republic). Oil and refining services value totalled 423 bln tenge.

In accordance with the oil supply schedules approved by RoK Ministry of Energy, KMG started processing oil at PetroKazakhstan Oil Products LLP’s refinery in Shymkent (hereinafter, PKOP) and selling oil products starting from August 2021. By the end of 2021, a total of 147,000 tonnes of KMG oil had been processed at PKOP.

The Republic of Kazakhstan has also actively embarked on exchange trading of oil products. As of December 2021, 75% of liquefied petroleum gas and 10% of light oil products were sold on electronic trading platforms.

Wholesale of KMG Oil Products Produced in the Republic of Kazakhstan, thous. tonnes

The country’s domestic market was 100% supplied with domestic oil products.

In accordance with Technical Regulations of the Customs Union 013/2011 on Requirements for Motor and Aviation Gasoline, Diesel and Marine Fuels, Jet Fuel and Heating Oil (hereinafter, TR CU), the quality of produced fuel corresponds to environmental classes K4 and K5 (similar to Euro-4 and Euro-5).

In accordance with TR CU, no metal-containing additives (containing manganese, lead and iron) may be used in motor gasoline and diesel fuel, the sulphur content maximum is 50 mg/kg and the benzene content maximum is 1%.

The purpose of completed upgrading of the RoK refineries is to improve the quality of motor fuels produced to K-5 level (equivalent to Euro-5 standard).

At that, we have decreased the content of harmful substances in the produced motor fuels, the main source of human-induced health impacts from vehicle exhaust emissions:

• by a factor of 10 for sulphur (source of sulphur oxides);
• by a factor of 1.5 for aromatic substances (source of soot);
• by a factor of 5 for benzene (source of benzoperene, which is a carcinogen and is classified as hazard class 1).

Also in 2021, Atyrau Refinery LLP, Pavlodar Refinery LLP, PKOP LLP and Caspi Bitum JV LLP approved Action Plans for Energy and Resource Conservation and Atmospheric Emission Reduction until 2031.

More detailed information about the Company’s operations and financial performance is available in the 2021 Annual Report:  https://www.kmg.kz/eng/investoram/reporting-and-financial-result