BRINGING IDEAS TO LIFE
JSC NC KAZMUNAYGAS ANNUAL REPORT 2023
JSC NC KAZMUNAYGAS ANNUAL REPORT 2023
Boundaries of the Annual
Report of JSC NC KazMunayGas /
Disclaimer
The Report of JSC National Company KazMunayGas
for 2023 includes the performance results of the parent
company and its subsidiaries and associates, referred
to as JSC NC KazMunayGas (KMG, the Company, KMG
Group), which are compiled using the principles of the KMG
consolidated financial statements prepared under
International Financial Reporting Standards (IFRS).
In the Annual Report, a number of production and
economic performance indicators are determined under
IFRS and in relation to the aggregate of KMG companies
for the purposes of KMG’s IFRS consolidated financial
statements for the year ended 31 December 2023 and
may differ from similar indicators of KMG’s reporting
documents prepared in accordance with the requirements
of the legislation of the Republic of Kazakhstan.
However, some of the Company’s performance
indicators presented use the principles that are followed
in the preparation of management statements and
other statements. Due to variations in the procedures
utilised to generate the consolidated financial statements
and other statements, there may be inconsistencies
in the indicators calculated using these procedures.
The analysis of financial performance must be viewed
in the context of the Company’s audited IFRS consolidated
financial statements for the year ended 31 December 2023.
The Annual Report includes statements that are,
or may be deemed to be, «forward-looking statements»
relating to KMG’s future operating performance
based on projections and estimates of the Company’s
management based on the current situation. Forward-
looking statements cover all matters that are not
historical facts. They include, but are not limited to,
statements regarding KMG’s intentions, beliefs and current
expectations concerning the Company’s performance,
financial condition, liquidity, prospects, growth, strategies
and the industries in which the Company operates.
By their nature, forward-looking statements involve risk
and uncertainty because they relate to future events
and circumstances that may or may not occur, i.e.,
due to the influence of various objective factors, actual
performance may differ from these projections and
estimates.
JSC NC KAZMUNAYGAS ANNUAL REPORT 2023
Report of JSC NC KazMunayGas /
Disclaimer
The Report of JSC National Company KazMunayGas
for 2023 includes the performance results of the parent
company and its subsidiaries and associates, referred
to as JSC NC KazMunayGas (KMG, the Company, KMG
Group), which are compiled using the principles of the KMG
consolidated financial statements prepared under
International Financial Reporting Standards (IFRS).
In the Annual Report, a number of production and
economic performance indicators are determined under
IFRS and in relation to the aggregate of KMG companies
for the purposes of KMG’s IFRS consolidated financial
statements for the year ended 31 December 2023 and
may differ from similar indicators of KMG’s reporting
documents prepared in accordance with the requirements
of the legislation of the Republic of Kazakhstan.
However, some of the Company’s performance
indicators presented use the principles that are followed
in the preparation of management statements and
other statements. Due to variations in the procedures
utilised to generate the consolidated financial statements
and other statements, there may be inconsistencies
in the indicators calculated using these procedures.
The analysis of financial performance must be viewed
in the context of the Company’s audited IFRS consolidated
financial statements for the year ended 31 December 2023.
The Annual Report includes statements that are,
or may be deemed to be, «forward-looking statements»
relating to KMG’s future operating performance
based on projections and estimates of the Company’s
management based on the current situation. Forward-
looking statements cover all matters that are not
historical facts. They include, but are not limited to,
statements regarding KMG’s intentions, beliefs and current
expectations concerning the Company’s performance,
financial condition, liquidity, prospects, growth, strategies
and the industries in which the Company operates.
By their nature, forward-looking statements involve risk
and uncertainty because they relate to future events
and circumstances that may or may not occur, i.e.,
due to the influence of various objective factors, actual
performance may differ from these projections and
estimates.
JSC NC KAZMUNAYGAS ANNUAL REPORT 2023
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CONTENTS
12 STRATEGIC
REPORT
14 ABOUT THE COMPANY
22 STATEMENT FROM THE CHAIRMAN OF THE
BOARD OF DIRECTORS
26 STATEMENT FROM THE CHAIRMAN OF THE
MANAGEMENT BOARD
30 STRATEGY
30 Market overview
42 KMG development strategy
52 Corporate key performance indicators
53 Performance under investment projects
60 OPERATING REVIEW
61 Reserves
61 Exploration
71 Upstream
90 Oil transportation
99 Downstream
111 Petrochemicals
118 Service projects
120 Innovative technology development
126 FINANCIAL OVERVIEW
138 ENSURING SUSTAINABLE DEVELOPMENT
139 KMG’s principles of sustainability management
140 Comprehensive approach to ensuring KMG’s
sustainable development
144 ESG risk rating
147 Commitment to UN Global Compact principles and
17 Sustainable Development Goals
166 Sustainable development KPIs of KMG’s
management
167 Low-Carbon Development Programme
174 Health, safety and environment
192 Social responsibility
203 Supplier relations
208 Digitalisation and cyber security
210 TCFD-aligned disclosure
214 CORPORATE
GOVERNANCE
216 CORPORATE GOVERNANCE FRAMEWORK
218 DEVELOPMENT OF THE CORPORATE
GOVERNANCE FRAMEWORK
220 BOARD OF DIRECTORS
238 COMMITTEES OF THE BOARD OF DIRECTORS
246 MANAGEMENT BOARD PERFORMANCE REPORT
256 REMUNERATION REPORT
258 RESPONSIBILITY STATEMENT
259 CORPORATE CONTROL
259 Internal audit
260 Compliance Service
262 Ombudsman Office
262 External audit
263 Risk management and internal control
277 STAKEHOLDER ENGAGEMENT
279 SHAREHOLDER AND INVESTOR RELATIONS
286 FINANCIAL
STATEMENTS
376 APPENDIX
376 REPORT ON COMPLIANCE / NON-COMPLIANCE
WITH THE PRINCIPLES AND PROVISIONS
OF THE CORPORATE GOVERNANCE CODE
OF JSC NC KAZMUNAYGAS
380 MAJOR AND INTERESTED-PARTY TRANSACTIONS
381 GLOSSARY
384 CONTACTS
CONTENTS
12 STRATEGIC
REPORT
14 ABOUT THE COMPANY
22 STATEMENT FROM THE CHAIRMAN OF THE
BOARD OF DIRECTORS
26 STATEMENT FROM THE CHAIRMAN OF THE
MANAGEMENT BOARD
30 STRATEGY
30 Market overview
42 KMG development strategy
52 Corporate key performance indicators
53 Performance under investment projects
60 OPERATING REVIEW
61 Reserves
61 Exploration
71 Upstream
90 Oil transportation
99 Downstream
111 Petrochemicals
118 Service projects
120 Innovative technology development
126 FINANCIAL OVERVIEW
138 ENSURING SUSTAINABLE DEVELOPMENT
139 KMG’s principles of sustainability management
140 Comprehensive approach to ensuring KMG’s
sustainable development
144 ESG risk rating
147 Commitment to UN Global Compact principles and
17 Sustainable Development Goals
166 Sustainable development KPIs of KMG’s
management
167 Low-Carbon Development Programme
174 Health, safety and environment
192 Social responsibility
203 Supplier relations
208 Digitalisation and cyber security
210 TCFD-aligned disclosure
214 CORPORATE
GOVERNANCE
216 CORPORATE GOVERNANCE FRAMEWORK
218 DEVELOPMENT OF THE CORPORATE
GOVERNANCE FRAMEWORK
220 BOARD OF DIRECTORS
238 COMMITTEES OF THE BOARD OF DIRECTORS
246 MANAGEMENT BOARD PERFORMANCE REPORT
256 REMUNERATION REPORT
258 RESPONSIBILITY STATEMENT
259 CORPORATE CONTROL
259 Internal audit
260 Compliance Service
262 Ombudsman Office
262 External audit
263 Risk management and internal control
277 STAKEHOLDER ENGAGEMENT
279 SHAREHOLDER AND INVESTOR RELATIONS
286 FINANCIAL
STATEMENTS
376 APPENDIX
376 REPORT ON COMPLIANCE / NON-COMPLIANCE
WITH THE PRINCIPLES AND PROVISIONS
OF THE CORPORATE GOVERNANCE CODE
OF JSC NC KAZMUNAYGAS
380 MAJOR AND INTERESTED-PARTY TRANSACTIONS
381 GLOSSARY
384 CONTACTS
New fields
launched
As part of the initiative to increase gas
production at its operating and exploration
assets, the Company put three new gas
fields – South Aksay, East Urikhtau, and
Rozhkovskoye – into production in 2023.
The new fields in operation will increase
gas supplies to the domestic market.
South Aksay East Urikhtau
recoverable
gas reserves
recoverable oil
reserves
gas per year dissolved gas reserves
1.7 bln m 3 4 mln tonnes
+100 mln m 3 2.2 bln m 3
Gas condensate
field
Start of production:
May 2023
Oil and gas
field
Start of production:
December 2023
With South Aksai put into production,
KMG’s joint venture Kazgermunai will
additionally supply up to 100 mln m 3 of gas
per year for the needs of Kyzylorda Region
residents.
East Urikhtau is the first field in Kazakhstan
to be commercially developed under the improved
model contract.
With six production wells currently in operation,
there are plans to drill another nine production
wells. This is expected to increase oil production
to 200 thous. tonnes per year, while also boosting
associated gas production to 100 mln m 3 per year.
JSC NC KAZMUNAYGAS ANNUAL REPORT 2023
launched
As part of the initiative to increase gas
production at its operating and exploration
assets, the Company put three new gas
fields – South Aksay, East Urikhtau, and
Rozhkovskoye – into production in 2023.
The new fields in operation will increase
gas supplies to the domestic market.
South Aksay East Urikhtau
recoverable
gas reserves
recoverable oil
reserves
gas per year dissolved gas reserves
1.7 bln m 3 4 mln tonnes
+100 mln m 3 2.2 bln m 3
Gas condensate
field
Start of production:
May 2023
Oil and gas
field
Start of production:
December 2023
With South Aksai put into production,
KMG’s joint venture Kazgermunai will
additionally supply up to 100 mln m 3 of gas
per year for the needs of Kyzylorda Region
residents.
East Urikhtau is the first field in Kazakhstan
to be commercially developed under the improved
model contract.
With six production wells currently in operation,
there are plans to drill another nine production
wells. This is expected to increase oil production
to 200 thous. tonnes per year, while also boosting
associated gas production to 100 mln m 3 per year.
JSC NC KAZMUNAYGAS ANNUAL REPORT 2023
Improved efficiency across
the Company’s value chain
Rozhkovskoye
Strategic goal:
recoverable
gas reserves
gas production
gas condensate production
liquefied petroleum gas production
project investments
recoverable condensate
reserves
26.9 bln m 3 1 bln m 3 per year
500+ thous. tonnes per year
150+ thous. tonnes per year
USD 147 mln
12.5 mln tonnes
Gas condensate
field
Start of production:
December 2023
The extracted raw gas will be transported to
the gas processing facilities of Zhaikmunai, and
the resulting marketable gas will be supplied to
domestic market consumers.
When reaching full capacity:
3 2 Strategic
report
Corporate
governance
Financial
statements
Appendices
the Company’s value chain
Rozhkovskoye
Strategic goal:
recoverable
gas reserves
gas production
gas condensate production
liquefied petroleum gas production
project investments
recoverable condensate
reserves
26.9 bln m 3 1 bln m 3 per year
500+ thous. tonnes per year
150+ thous. tonnes per year
USD 147 mln
12.5 mln tonnes
Gas condensate
field
Start of production:
December 2023
The extracted raw gas will be transported to
the gas processing facilities of Zhaikmunai, and
the resulting marketable gas will be supplied to
domestic market consumers.
When reaching full capacity:
3 2 Strategic
report
Corporate
governance
Financial
statements
Appendices
Alternative oil
export routes
KMG consistently takes steps to develop
alternative export routes for Kazakhstan’s oil.
These steps include:
– crude oil supplies to Germany
through the Druzhba pipeline;
– crude oil supplies from the Port of
Aktau via Azerbaijan to the Baku–
Tbilisi–Ceyhan pipeline;
– Kazakhstan–China oil pipeline
expansion in partnership with CNPC.
shipped from the Port of
Aktau in 2023
1,057 thous. tonnes
Shipments of Kazakhstan’s oil via the Aktau–Baku–
Tbilisi–Ceyhan (BTC) route commenced in 2023.
In November 2022, KMG and Azerbaijan’s SOCAR
inked an agreement for the transit of Kazakhstan’s
oil via the Port of Aktau and further on via Baku and
the Baku–Tbilisi–Ceyhan pipeline.
The oil is transported from the Port of Aktau to
Baku on the tankers operated by KMG’s subsidiary
Kazmortransflot (KMTF).
Port
of Aktau
Port
of Baku
Ceyhan
Tbilisi
Crude oil supplies via Azerbaijan
Aktau to Baku–Tbilisi–Ceyhan (BTC) route
JSC NC KAZMUNAYGAS ANNUAL REPORT 2023
export routes
KMG consistently takes steps to develop
alternative export routes for Kazakhstan’s oil.
These steps include:
– crude oil supplies to Germany
through the Druzhba pipeline;
– crude oil supplies from the Port of
Aktau via Azerbaijan to the Baku–
Tbilisi–Ceyhan pipeline;
– Kazakhstan–China oil pipeline
expansion in partnership with CNPC.
shipped from the Port of
Aktau in 2023
1,057 thous. tonnes
Shipments of Kazakhstan’s oil via the Aktau–Baku–
Tbilisi–Ceyhan (BTC) route commenced in 2023.
In November 2022, KMG and Azerbaijan’s SOCAR
inked an agreement for the transit of Kazakhstan’s
oil via the Port of Aktau and further on via Baku and
the Baku–Tbilisi–Ceyhan pipeline.
The oil is transported from the Port of Aktau to
Baku on the tankers operated by KMG’s subsidiary
Kazmortransflot (KMTF).
Port
of Aktau
Port
of Baku
Ceyhan
Tbilisi
Crude oil supplies via Azerbaijan
Aktau to Baku–Tbilisi–Ceyhan (BTC) route
JSC NC KAZMUNAYGAS ANNUAL REPORT 2023
Improved efficiency across the
Company’s value chain
Strategic goal:
shipped to Germany in 2023
993 thous. tonnes
Shipments of Kazakhstan’s oil to Germany (the
refinery in Schwedt) via the Atyrau–Samara pipeline
and further on via the Druzhba pipeline commenced
in February 2023.
The German partners are keen on amplifying oil
imports from Kazakhstan to 200 thous. tonnes per
month. In December 2023, the current oil supply
contract was extended for six months until June
2024, potentially extendable until the year-end.
Oil supplies to Germany
Atyrau
Samara
Adamowo-
Zastawa
Schwedt
Druzhba pipeline
Expansion of maritime operations
In January 2023, to refine maritime operations technology-wise, KMG established a joint venture
with Abu Dhabi Ports (ADP) from the UAE and bought two tankers, Taraz and Liwa. The vessels
are now actively engaged in transporting Kazakhstan’s oil in the Caspian Sea.
In mid-2023, KMG/ADP’s combined tanker fleet embarked on its first joint venture of carrying
Tengiz oil in the open sea.
5 4 Strategic
report
Corporate
governance
Financial
statements
Appendices
Company’s value chain
Strategic goal:
shipped to Germany in 2023
993 thous. tonnes
Shipments of Kazakhstan’s oil to Germany (the
refinery in Schwedt) via the Atyrau–Samara pipeline
and further on via the Druzhba pipeline commenced
in February 2023.
The German partners are keen on amplifying oil
imports from Kazakhstan to 200 thous. tonnes per
month. In December 2023, the current oil supply
contract was extended for six months until June
2024, potentially extendable until the year-end.
Oil supplies to Germany
Atyrau
Samara
Adamowo-
Zastawa
Schwedt
Druzhba pipeline
Expansion of maritime operations
In January 2023, to refine maritime operations technology-wise, KMG established a joint venture
with Abu Dhabi Ports (ADP) from the UAE and bought two tankers, Taraz and Liwa. The vessels
are now actively engaged in transporting Kazakhstan’s oil in the Caspian Sea.
In mid-2023, KMG/ADP’s combined tanker fleet embarked on its first joint venture of carrying
Tengiz oil in the open sea.
5 4 Strategic
report
Corporate
governance
Financial
statements
Appendices