Business Model and Value Chain

Joint Stock Company National Company “KazMunayGas” is a unique vertically integrated oil and gas operator that carries out a full production cycle from exploration and production of hydrocarbons, their transportation and refining to provision of specialized services, representing the interests of the state in the oil and gas industry of Kazakhstan.

KMG was formed by the decree of the President of Kazakhstan dated February 20, 2002 by merging CJSC “NOC “Kazakhoil” and CJSC “NC “Oil and Gas Transportation”. The founder of KMG is the Government of the Republic of Kazakhstan represented by the State Property and Privatization Committee of the Ministry of Finance of the Republic of Kazakhstan.

KMG shareholders: Joint Stock Company “Samruk-Kazyna” (90 %) and the National Bank of the Republic of Kazakhstan
(10 %).

Exploration and Production Sector

Main Exploration Assets

Production

Oilfield Services

Scientific Research and Technology

Production assets:

  1. Ozenmunaygas JSC (100%) – 5,480 Kt
  2. Embamunaygas JSC (100%) – 2,840 Kt

Joint ventures:

  1. PetroKazakhstan Inc. (33 %) – 1,077 Kt
  2. Karazhanbasmunay JSC (50 %) – 1,071 Kt
  3. Kazgermunay JV LLP (50 %)-1,400 Kt

Exploration assets:

  1. Ural Group Limited JSC (50 %)
  2. Karpovsky Severny LLP (100 %)

KazMunayGas Exploration & Production JSC is a subsidiary of KMG, which in 2017 owned 58 % of the total number of shares. KMG EP was established in March 2004 through the merger of Ozenmunaygas JSC and Embamunaygas JSC. The KMG EP’s own assets, excluding acquisitions made in 2007–2011, of 41 fields. The largest of these is the Ozen field, which has been operating since 1965. In 2017, KMG EP planned to join to its parent company, the deal was scheduled for 2018.

Mangistaumunaygas (50%) is one of the largest oil and gas producing enterprises in the Republic of Kazakhstan, and is currently developing 15 oil and gas fields with total initial reserves of 1,124.671 MMt (8,131 MMbbl).

Tengizchevroil LLP (TCO), Karachaganak Petroleum Operating B.V. (KPO) and North Caspian Operating Company N.V. (NCOC) are the largest non-operating assets of KMG.

Oil Transportation Sector

Oil transportation systems are one of the main elements of Kazakhstan’s economic and energy potential, as well as an instrument for integrating the state into the global economy.

NMSC Kazmortransflot LLP – the national sea carrier.

KMTF’s assets include 8 tankers, 17 tug barges.

Subsidiaries:

  • Kazmortransflot Ltd. – 100 %
  • Kazmortransflot UK Ltd – 100 %
  • Altai Shipping Ltd – 100 %
  • Alatau Shipping Ltd – 100 %

KazTransOil JSC renders services for oil transportation to the domestic market, for export, and also transits oil.

The assets structure of the KazTransOil Group of companies:

  • “MunaiTas” NWPC” JSC (Kazakhstan) – 51 %
  • Kazakhstan – China Pipeline LLP – 50 %
  • Batumi Oil Terminal Ltd. (Georgia) – 100 %
  • Batumi Sea Port Ltd. (Georgia) – 100 %
  • Petrotrans Limited (UAE, ADGM) – 100 %
  • Main Waterline LLP (Kazakhstan) – 100 %

The total length of the pipelines is 5.4 thousand km.

To date, the main export routes of Kazakhstan oil are:

  • Atyrau – Samara pipeline (KazTransOil JSC – 100 %);
  • Caspian Pipeline Consortium pipeline (JSC NC “KazMunayGas” – 20.75 %);
  • Atassu – Alashankou pipeline (KazTransOil JSC – 50 %);
  • Aktau sea terminal.

Vessels of Kazmortransflot JSC are the most modern in the Caspian Sea and comply with all applicable international standards of navigation.

Export is carried out by pipeline transport by marine transportation from the Aktau Port in the Caspian Sea, from the ports of Batumi and Novorossiysk on the Black Sea, and also in the Mediterranean Sea.

Directions of transportation:

  • Aktau  – Makhachkala
  • Aktau  – Baku
  • Black Sea
  • Mediterranean Sea
  • Turkmenbashi  – Baku/Makhachkala
  • Yuri Korchagin MTC – Baku

In 2017 oil transportation amounted to 65,489 Kt, including by pipeline – 58,538 Kt, (length of MN – 7,585.3 km), by marine fleet – 6,951 Kt.

Refining Sector


Kazakhstan’s refining sector is represented by a number of large oil and gas refineries:

  1. Atyrau Refinery (AR): refinery design capacity – 5.0 MMtpa, refining depth – 62.73 %.
  2. Shymkent Refinery (PetroKazakhstan Oil Pro-ducts, PKOP): design capacity – 6.0 MMtpa, refining depth – 73.03 %.
  3. Pavlodar Petrochemical Plant (PPCP): the most technologically complicated oil refinery in Kazakhstan. Balanced capacity capacity – 5.1 MMtpa, refining depth – 76.08 %. The plant is designed for refining oil of West Siberia.
  4. CASPIBITUM a plant for producing road bitumen of heavy Karazhanbas oil. The refinery design capacity is 1.0 MMtpa.

 

There are 3 gas processing plants with a total refining capacity of 18.9 bcmpa in the republic:

  1. Kazakh Gas Processing Plant (KazGPP) with a refining capacity of natural gas of 2.9 bcm.
  2. Zhanazhol Gas Processing Plant (ZGPP) – 4 bcm.
  3. Tengiz Gas Processing Plant (TGPP) – 12 bcm.

In addition, in accordance with the Agreement on Counter Deliveries of Gas Supplies between Gazprom, Uzbeknefte-gaz NHC and JSC NC “KazMunayGas” dated December 27, 2006, the gas of the Karachaganak field is refined at the Orenburg GPP.

In 2017, oil refining – 14,874 Kt, oil sales – 23,158 Kt, gas sales – 17,759 MMcm.

Key refining indicators in 2017: 

  • AR  4,724 Kt
  • PKOP 2,343 Kt
  • PPCP 4,747 Kt
  • CASPIBITUM 359 Kt

KazMunayGas Refining & Marketing JSC is a Kazakhstani leader in the field of refining and marketing of oil products, owning modernized oil refining assets. As part of KMG transformation, KazMunayGas Refining & Marketing JSC was merged with the structure of the KMG parent group in 2017.

MARKETING AND REALIZATION OF OIL PRODUCTS


KazMunayGas Onimderi LLP is a company for retail sale of fuels and lubricants. We sell a wide range of oil products, including high-quality gasoline, diesel fuel, aviation kerosene, heating oil, fuel oil, vacuum gasoil, coke, liquefied gas, sulfur and bitumen – both for export and domestic market of the RoK, wholesale and retail.

To date, the retail network of “KazMunayGas” FFS is the largest in the RoK both in the number of FFSs and in terms of sales volumes. 

In KMG there are 11 own oil bases.

No.

Type of oil product

Oil product wholesale volume, Kt

Market share in the RoK, %

1

Gasoline (AI-80, AI-92, AI-95, AI-98 retail sale)

409.29

14

2

Diesel fuel

726.43

14

3

Fuel oil

717.31

 

4

Bitumen

18.76

 

5

Liquefied gas

46.83

 

6

Sulfur

1.55

 

7

Pet coke

86.32

 

8

Vacuum gasoil

327.2

 

9

Jet fuel

9.78

 

10

Other

3.65

 

The main mission of KazMunayGas Onimderi JSC is to provide the RoK’s domestic market with high-quality oil products and their sale through the extensive retail network of “KazMunayGas”.

Retail sales of oil products on the domestic market of Kazakhstan

343 FFSs under the brand of “KazMunayGas” (KazMunayGas Onimderi LLP), including

  • 25 DODO FFSs;
  • 176 COCO FFSs;
  • 142 CODO FFSs.

In the assortment of the retail basket of KazMunayGas Onimderi LLP light oil products of AI-80, AI-92, AI-95, AI-98, DF gasoline brands prevail.

Large consumers by segments:

  • national companies – 18 %
  • state bodies and institutions – 21 %
  • other legal entities – 55 %
  • individuals – 6 %

 

The FFS retail network is territorially located in the following regions:

No.

Region

FFS number

Sales volumes of FFSs for 2017, in tons

1

Astana city

26

111,885.77

2

Pavlodar

13

52,095.97

3

Akmola

19

55,031.37

4

Kostanay

12

42,054.26

5

North Kazakhstan

20

52,394.09

6

Karaganda

44

112,563.02

7

East Kazakhstan

26

90,711.22

8

Almaty city

22

63,205.55

9

Almaty

34

82,786.11

10

Zhambyl

16

44,892.46

11

Kyzylorda

14

35,714.33

12

South Kazakhstan

18

26,896.00

13

Atyrau

24

65,933.43

14

Mangistau

20

79,025.24

15

Aktobe

21

74,105.46

16

West Kazakhstan

14

60,866.96

 

TOTAL

343

1,050,161.26

There are also 12 GFSs and 3 GFSs/FFSs in Mangistau Region, which supply consumers with refueling gas.

KMG International N.V.


KMG International N.V. is a foreign asset of KMG in Europe and owns one of the largest and most modern oil refineries in the Black Sea region – Petromidia Năvodari, as well as the Vega Ploiesti refinery and the only polymer producer.

Outside of Kazakhstan, the KazMunayGas group has more than a thousand fuel sales points in Romania, Moldova, Bulgaria, Georgia, France and Spain. KMG International N.V. is a strategic enterprise for oil refining, marketing of oil and oil products in Romania and the countries of the Black Sea and Mediterranean basins.

The network of gas stations of the KMG International group under the Rompetrol brand has more than 1,000 points of sale, of which 600 are company owned filling stations.

The subsidiary KMG Trading, is a single operator that exports crude oil from the company’s resources to the parent company of KMG, as well as trading operations in international markets.

Exploration, production, transportation and sale of gas


The management of the KazTransGas Group of companies has an extensive infrastructure for transpor-ting sales gas through trunk gas pipelines and gas distribution networks, which provides domestic transit of sales gas to more than seven million domestic consumers. Today, gas is delivered to many parts of the country, supplying villages and large cities, and gas provides jobs for Kazakh industrial and manufacturing enterprises.

The gas transportation infrastructure of the Republic of Kazakhstan for gas transit consists of the following trunk gas pipelines:

  • Central Asia – Center – length – about 4,151 km, capacity – 47.2 bcmpa;
  • Bukhara –Ural – length – about 1,575 km, capacity – 
8.5 bcmpa;
  • Orenburg – Novopskov and Soyuz TGP – length – 760 km, capacity – 16 bcmpa and 24.4 bcmpa;
  • Kazakhstan – China – length – 3,917 km, part of the Cent-ral Asia – China trunk gas pipeline, operating capacity – 50 bcmpa with further expansion to 65 bcmpa;
  • Okarem – Beyneu (with looping) –  length – 546 km, capacity – 7.2 bcmpa;
  • Beineu – Bozoy – Shymkent – length –1,454 km, capacity –10 bcmpa;
  • Bukhara gas-bearing region – Tashkent – Bishkek – Almaty (BGR – TBA)  –  length –1,637 km, capacity – 5.8 bcmpa.

Gas transportation othrough the main gas pipelines in 2017 amounted to 100.857 billion m3 (the length of the gas pipelines is 18,960 km).

KazTransGas JSC is the national operator in the field of gas production and supply, is the main gas-energy and gas transportation company of Kazakhstan.

The asset structure consists of 14 subsidiary dependent entities:

  1. Intergas Central Asia JSC – 100 %
  2. Beineu – Shymkent Gas Pipeline LLP – 50 %
  3. Intergas Finance B.V. – 100 %
  4. KMG Kansu Operating LLP – 100 %
  5. Kaztransgas – Bishkek LLC – 100 %
  6. KazTransGas – Tbilisi LLC – 100 %
  7. Asia Gas Pipeline LLP – 50 %
  8. Asia Gas Pipeline – Khorgos LLP – 100 %
  9. KazTransGas Aimak JSC – 100 %
  10. KazRosGas LLP – 50 %
  11. KazTransGas Onimderi LLP – 100 %
  12. AvtoGas Almaty LLP – 50 %
  13. Astana Gas KMG JSC – 100 %
  14. Amangeldy Gas LLP – 100 %

Key Economic Indicators for 2017

Indicator Name

UoM

2017 Actual

PRODUCTION INDICATORS

 

 

Oil and gas condensate production

Kt

23,362

Gas production

Kt

7,997

Oil transportation

Kt

65,489

Oil turnover

MMt*km

48,360

Gas transportation

MMcm

100,857

Volume of goods transport works for gas transportation

bcm*km

47,652

Oil refining

Kt

16,879

FINANCIAL INDICATORS

 

 

Income from operating activities

KZT bn

2,459

Cost

KZT bn

2,380

Net income (loss)

KZT bn

437

Capital expenditures

KZT bn

703

Following the results of 2017, KMG showed the following results results on the KPI main strategic indicators KPIs:

KPI

Unit of Measurement

2016 (actual)

2017 actual

Volume of oil and condensate production

MMt

22,6

23.4

Reserves (А+В+С1)

MMt

786

756

ROACE*

%

7.1

9.1

For reference: * ROACE = (profit for the year + compensation costs, adjusted for tax payments) / average capital employed excluding cash and bank deposits

KMG Ratings in 2017:

Moody’s

S & P

Fitch

Aaa

AAA

AAA

Aa1

AA+

AA+

Aa2

AA

AA

A1

A+

A+

A2

A

A

Aa3

AA-

AA-

A3

A-

A-

Baa1

BBB+

BBB+

Baa2

BBB

BBB

Baa3

BBB-

BBB-

Ba1

BB+

BB+

Ba2

BB

BB

Ba3

BB-

BB-

B1

b+

B+

B2

b

B

B3

b-

B-

Caa1

ccc+

CCC+

Caa2

ccc

CCC

Caa3

ccc-

CCC-

Volume of oil product sales in 2017, thousand ton

Number of employees

Total number of subdivisions