Inspired, Achieved,
Proud

Dear shareholders, investors, colleagues, and partners!

The year 2022 was a jubilee year for us – we celebrated the centennial anniversary of the first-born of domestic oil production Embamunaigas, twenty-five years of the national main pipeline operator KazTransOil and twenty years of KazMunayGas. And we have much to be proud of – over its 20-year history, KazMunayGas has become the national leader of Kazakhstan’s oil and gas industry, a technologically advanced and promptly responding to global challenges.

The past year has undeniably brought about significant adjustments to the global energy landscape. The increase in geopolitical and geo-economic tensions, polarization of international relations, and sanction confrontations have made it impossible for market players to continue developing according to the previous patterns. The timing and logic of historical development dictate the need for change.

In response to new challenges, KazMunayGas has initiated new ambitious projects, intensified international cooperation, become a public company, and implemented a series of changes aimed at fostering social stability.

In this context, the ESG agenda, whose importance is developing, naturally holds a prominent position. Today, the Company’s strategic objectives are implemented with sustainable development priorities in mind. Sustainalytics, an international rating agency, emphasizes KMG’s strong position in the management of significant ESG risks in the international oil and gas market. KMG is among the top 20 global energy and gas companies according to the rating agency.

The company is aimed at ensuring efficiency of the current production, development of new process stages, introduction of modern energy-saving technologies, and reduction of the carbon footprint to contribute to the global fight against climate change. Our company was one of the first in Kazakhstan to approve a Low-Carbon Development Program. Given the long-term trends in the energy transition, we are building our portfolio of low-carbon projects. We are currently working on reducing greenhouse gas emissions and implementing joint projects in the field of renewable energy sources.

In addition, the Company has launched a large-scale integrated gas chemical complex LLP Kazakhstan Petrochemical Industries Inc. with a design capacity of up to 500,000 tons of finished products per year. The raw material used is propane from the Tengiz field, purified from harmful impurities, which minimizes the impact on the environment.

The Company employs more than 47,000 people. Our approach to staff motivation is based on the principles of decent wages, transparency, and respect for the rights of all employees. In the reporting period, KMG Group retained all social benefits in accordance with the collective bargaining agreements. In all production enterprises of KMG, the possibility for each employee to ask questions to the management of the enterprise and receive a timely response is regulated. Reporting meetings of top managers with labor collectives are systematically held. The KMG Group has 36 trade union organizations that protect the interests of employees.

We adhere to the principle where the health and safety of employees take precedence over operating results. By the end of 2022, the number of fatal accidents decreased by 67 % compared to the previous year.

The Company also managed to achieve a positive trend in its financial and operating performance. The Company’s net profit in the reporting period amounted to 1,317 billion tenge.

Being one of the major taxpayers in the regions of its presence, the Company paid 1,176 billion tenge in taxes and other obligatory payments to the budget in 2022; 12 billion tenge was allocated to support social projects in the regions of presence under subsoil use contracts; charitable support is also provided annually.

Supporting domestic producers and increasing the local content in procurement is a priority for KMG. By the end of 2022, the total volume of procurement of goods works, and services by KMG Group of Companies from Kazakh companies amounted to 1700 billion tenge. The share of local content in procurements increased by 4 % as compared to the previous year and amounted to 82 %.

In December of the reporting year, the Company went public and listed its shares on the Kazakhstan Stock Exchange and Astana International Exchange. KMG’s IPO will allow the development of local stock markets, and the presence of a diversified investor base in the form of minority shareholders always encourages the company to develop, be more transparent, and adapted to modern realities.

In conclusion, I would like to note that I am proud of our Company’s results for the reporting period and for the entire journey of the Company’s formation, our best employees, and the daily contribution of each employee of the Company to the common cause. The oil and gas industry does not stand still and there is still a lot of hard work ahead. Inspired by the energy and results of our employees, together we achieve our goals.