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 Actions to Further Pursue the State Interests in the National Oil and Gas Sector, and RoK Government Resolution No. 248 dated 25 February 2002 on Actions 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

As of 31.12.2023, KMG Group includes 108 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, the Netherlands, Canada, Bulgaria, Moldova, Russia, Turkey, the United Kingdom, the United Arab Emirates, Canada, Gibraltar, the British Virgin Islands, the Marshall Islands, the Bahamas, the Isle of Man.

KMG is headquartered in Astana and has a Representative Office in Aktau.

Production value chain

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

Decree No. 523 of the Government of the Republic of Kazakhstan dated 02 August 2022 amended and supplemented the 2021–2025 Comprehensive Privatisation Plan.

The amended 2021–2025 Comprehensive KMG Privatisation Plan includes:

• 53 companies for sale;
• 94 companies are included in the KMG IPO perimeter;
• 7 companies in KMG Group, the procedure and conditions for the sale and reorganisation of which are established by the Management Board of Samruk-Kazyna JSC.

On 1st November 2023, KMG’s Board of Directors approved an updated KMG’s Non-Strategic Assets List (hereinafter – the NSA List), which provides for the withdrawal of nine companies from 2023 to 2025.

For 2023, three companies were planned to be withdrawn under the NSA List, two of which by winding-up and one by sale of participation interest.

In 2023, the following changes were made in the structure of KMG’s assets:

• 3 companies wound up;
• 2 companies incorporated;
• 2 companies acquired;
• interests in 2 companies sold.

Production value chain

KMG ships diesel fuel for field agricultural activities and supplies fuel oil to social and production facilities and institutions during the heating season.

Also, in 2023, KMG sold aviation fuel through its subsidiary KMG-Aero LLP and exchange trading platforms for the Aviation Services of the Ministry of Defense, the National Security Committee and the National Guard of the Republic of Kazakhstan, as well as for local airports and airlines of the Republic of Kazakhstan.

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

The structure of oil product exports in 2023 was dominated by shipments of dark oil products to Europe. Paraxylene, benzene, coke, and sulphur were supplied to Europe, China, Russia, Tajikistan and Turkey.

Exports of petroleum products produced from KMG resources, broken down by share and directions of supply

In 2023, KMG purchased oil from four 100 % oil producing subsidiaries (Ozenmunaigas JSC, Embamunaigas JSC, Kazakhturkmunay LLP and Urikhtau Operating LLP) located in Western Kazakhstan for further processing at three refineries (Atyrau Refinery, Pavlodar Oil Chemistry Refinery and PetroKazakhstan Oil Products).

Oil and refining services value totalled KZT 685 bln.

In connection with the completion of the trial production phase of the oil field and preparation for the signing of an improved model subsoil use contract, Urikhtau Operating LLP suspended oil supply to Pavlodar Oil Chemistry Refinery in the second half of 2023. In total, KMG processed 16.4 thousand tonnes of Urikhtau Operating LLP’s oil at Pavlodar Oil Chemistry Refinery at the end of 2023, while the plan was 28.3 thousand tonnes.

Also, in the Republic of Kazakhstan, in accordance with the plans of oil products supply, approved by the Ministry of Energy of Kazakhstan, exchange trade in motor gasoline, aviation fuel and bitumen was carried out. Since November 2023, additional diesel fuel in the amount of 10 % of the total sales under the plans of petroleum products supply began to be offered for exchange trading.

In accordance with Technical Regulations of the Customs Union 013/2011 on Requirements for Motor and Aviation Gasoline, Diesel and Marine Fuels, Aviation 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).

Wholesale sales of KMG oil products produced in the Republic of Kazakhstan, thous. tonnes

ACHIEVEMENTS IN OIL REFINING IN 2023