Нефтяная отрасль - JSC KazMunaiGas

General Information

• Created through the merger of JSС Uzenmunaigas (UMG) and JSС Embamunaigas (EMG) in March 2004. KMG EP is subsidiary of NC KMG.
• The Company’s shares are listed on Kazakhstan Stock Exchange and the GDRs are listed on London Stock Exchange. The Company raised approximately US$2 billion in its IPO in September of 2006.
• The 2nd largest Kazakh oil producing company in 2010.
• KMG EP operates 41 fields in Western Kazakhstan excluding acquisitions made from 2007 through 2011.
• At the end of 2010, proved plus probable oil reserves of the core assets (UMG and EMG) were estimated to be 232 million tonnes (1,707 million barrels), with an estimated reserves life of 26 years at 2010 production levels.
• KMG EP has many years' experience of oil production in Kazakhstan and expert knowledge of the geology.
• KMG EP has reached agreements that provide guaranteed access to the Uzen-Atyrau-Samara (UAS), which provides the main part of Company’s export, and pipeline and the Caspian Pipeline Consortium (CPC) pipeline which is the most profitable route of KMG EP’s oil sales.
• Oil sale is performed via KazMunayGas - Refining and Marketing.
• Exports accounted for 76% of 2011 sales in volume terms.
• Acquisitions of new assets is the major element of the Company’s Policy. In April 2007 KMG EP acquired a 50% stake in JV Kazgermunai LLP. In December 2007 KMG EP acquired a 50% stake in CCEL (Karazhanbasmunai) and in December 2009 the Company acquired 33% in PetroKazakhstan Inc - all that resulted in the increase of production and significant increase in oil reserves.
• Acquisition of exploration assets reflects updated strategy of KMG EP to shift its efforts towards exploration: the Company acquired 100% in LLP “SapaBarlauService” (currently JSC “KMG EP Exploration assets”, KMG EP EA) and 100% in LLP NBK in September 2010, 50% in “Urals Group Limited” which owns the license for the Fedorovskiy block in March 2011, four exploration blocks Temir, Teresken, Uzen-Karamandybas and Karaton-Sarkamys in April 2011 and 100% in JSC Karpovskiy Severniy in December 2011.
• KMG EP has developed successfully implements social program, which includes social partnership, educational projects, sponsorship and overall support of its employees and their families. KMG EP also places a strong emphasis on its responsibility towards the environment in the regions of its operations and beyond.

 

Our business

JSC KazMunaiGas Exploration Production (KMG EP or the Company) produces crude oil, natural and associated gas from its hydrocarbon reserves on-shore in Kazakhstan. The Company also has an active exploration programme to maintain and grow its reserve base.

JSC KazMunaiGas Exploration Production is a subsidiary of the national company for oil and gas operations in the Republic of Kazakhstan, JSC National Company KazMunaiGas (NC KMG). It was formed in March 2004 through the merger of JSC UzenMunaiGas (UMG) and JSC EmbaMunaiGas (EMG). Independent experts believe that the company’s core assets (UMG and EMG) contain proved plus probable oil reserves of 232 million tonnes (1 707 million barrels) as at December 31, 2010.

KMG EP has a portfolio of 41 oil and gas fields located onshore in Western Kazakhstan excluding acquisitions made from 2007 through 2011. The core production assets of the Company are its two production divisions: Uzenmunaigas (UMG) and Embamunaigas (EMG), with combined production of 159 kbopd in 2011. Uzen field is the biggest in the existing portfolio. Of the two divisions UMG accounted for more than 74% of reserves and 64% of 2011 production.

One of the main objectives for KMG EP is to ensure the growth of oil reserves. This growth is achievable through the acquisition of assets, exploration activity and the optimization of core fields.

With regard to UMG and EMG, the Company’s strategy is to maintain existing production levels in the forthcoming years by drilling and completing new wells, performing well work-overs and enhancing oil recovery by implementing new technologies.

The Company also intends to focus on improving its efficiency by continuing to optimize operating costs and rationalizing its operations across the board. This will be achieved through divesting non-core and ancillary businesses and by bringing the Company’s operations in line with international standards.

In order to continue to build on the significant successes of previous years, it is important to maintain progress on the programme for the sustained development of the Company’s core assets. This programme has been successfully reviewed and progressed at the Uzen field.

 

Oil reserves

Reserves growth

2P reserves, mln bbl
	KMG EP	KGM and CCEL + PKI
2010	1,707	448
2009	1,725	475
2008	1,775	377
2007	1,767	377
2006	1,495	0

 

Acquisition of new assets

2P reserves, mln bbl
UMG	1,259
EMG	447
CCEL 50%	224
KGM 50%	90
PKI, 33%	134

* Reserves of UMG, EMG, KGM and PKI as of 31/12/2010, CCEL as of 30/11/2010.

 

Production

The core production assets of the Company consist of two main divisions: Uzenmunaigas (UMG) and Embamunaigas (UMG). UMG accounted for more than 74% of core reserves and 64% of the 2011 core production level. Following strong production growth in 2000-2005, oil output of the existing fields is currently maintained at an optimal level. Production and cost optimization initiatives are being implemented. Production enhancement technologies are applied.

With regard to UMG and EMG, the Company’s strategy is to maintain existing production levels in the forthcoming years by drilling and completing new wells, performing well work-overs and enhancing oil recovery by implementing new technologies.

The Company also intends to focus on the improvement of efficiencies by continuing to reduce operating costs and rationalizing its operations across the board. This will be achieved through cost optimization, new technologies and by bringing the Companys operations in line with international standards.

Recent oil production growth

KMG EP’s core production operations take place across 41 fields at Uzen and Emba in Western Kazakhstan excluding acquisitions made from 2007 through 2011. One of the main tasks for the core assets is to maintain production levels by optimizing oil production and using new technology to maintain production level.

General economic difficulties and an acute lack of investment in the early to mid 1990s led to significant falls in production levels at the major oil-producing assets of KMG EP. However, towards the end of the 1990s the Company managed to halt the decline in production and then to ensure impressive production growth.

Production has risen by a total of 80% from 1998 to 2006. Enhanced investment in new drilling and more efficient recovery from existing fields has restored production levels. A major role in the recovery process was played by well workovers and the use of modern technologies such as hydro-fracturing. The Company’s strategy now is to maintain production from existing assets at the current optimal level for the next few years.

Kazgermunai

Kazgermunai was formed in 1993 with a view to attracting investment into the Republic of Kazakhstan from Germany. Under Kazgermunai’s Foundation Agreement, it was granted exclusive rights and licences for exploration and production at the Akshabulak, Nuraly and Aksai fields for a period of 30 years, expiring on 1 March 2024.

Kazgermunai currently operates the Akshabulak, Nuraly and Aksai oil fields. In total, Kazgermunai’s oil fields cover a territory of 897 km2. As at 31 December 2010, their proved plus probable reserves were 24 million tonnes (180 million barrels) of oil.

In 2011, Kazgermunai produced 3 million tonnes (63.3 kbopd) of crude oil (which represented a 3% decrease compared to 2010 production of 3.1 million tonnes (65.4 kbopd).

CCEL (Karazhanbasmunai)

CITIC Canada Petroleum Limited (formerly Nations Energy Company Ltd) was formed in 1996 as a private Canadian company to pursue international oil and gas E&P projects around the world. In 1997, Nations Energy acquired 94.62% of the share capital representing 100% of voting control of JSC ‘‘Karazhanbasmunai’’ from the Government of Kazakhstan. JSC Karazhanbasmunai holds 100% of the mineral rights until June 2020 to develop the Karazhanbas oil and gas field in the western part of Kazakhstan which, according to Miller and Lents, has proved and probable reserves of about 67 mmt (449 million barrels ) as of November of 2010. In 2011 JSC Karazhanbasmunai produced approximately 1.98 mmt (36 kbopd) of crude oil.

PetroKazakhstan Inc. (PKI)

The PetroKazakhstan Inc. group of companies is involved in hydrocarbon exploration and production as well as in the sale of oil and petroleum products. PKI has a share in 16 fields, 11 of which are in various stages of development.

As of 31 Dexember 2010 PKI's 2P oil reserves accounted for 53 mmt (407 million barrels). In 2011 PKI produced 5,9 thousand tonnes of oil (125kbopd).

 

Exploration

KMG EP has preferential access to exploration acreage due to its relationship with the Kazakh Government and the parent company. Together with the pre-emption rights to acquire existing oil and gas assets offered for sale, the Company has access to new areas obtained by NC KMG via direct negotiations with the government. Such advantage allows the Company to replenish its exploration portfolio and to compete effectively with the largest transnational oil corporations.

The Company maintains that the potential for exploration in Kazakhstan is considerable, both offshore and onshore. KMG EP is currently carrying out offshore exploration in the areas of Liman, Taisogan, R-9 and also in the areas neighbouring the Uzen and Karamandybas fields. Onshore the country has been well explored down to a depth of 3 – 3.5 kilometres. KMG EP believes, however, that there are large potential resources lying beneath that depth, particularly in the subsalt horizons.

The Company is planning to continue seismic studies at existing exploration blocks andplanning to drill exploration wells targeting subsalt structures as well as looking for additions to the Company's exploration portfolio using NC KMG's right for direct negotiations with the Government for new exploration licenses.

Acquisition of exploration assets reflects updated strategy of KMG EP to shift its efforts towards exploration: the Company acquired 100% in LLP “SapaBarlauService” (currently JSC “KMG EP Exploration assets”, KMG EP EA) and 100% in LLP NBK in September 2010, 50% in “Urals Group Limited” which owns the license for the Fedorovskiy block in March 2011, four exploration blocks Temir, Teresken, Uzen-Karamandybas and Karaton-Sarkamys in April 2011 and 100% in JSC Karpovskiy Severniy.

 

Transportation and Sales

Kazakhstan is essentially a landlocked country, so increased production for export requires an improved transportation infrastructure. Fortunately, this infrastructure has been developed considerably over the past few years.

Strong relations with the parent company provide KMG EP with reliable access to pipeline infrastructure. The UAS and CPC pipelines are key outlets for the Company’s exports. KMG EP is the largest supplier to Atyrau refinery. Kazgermunai supplies crude oil to China via Kazakhstan-China pipeline.

Until recently the main outlet for the Company’s production has been through Russia via the 1,500 km Uzen-Atyrau-Samara (UAS) pipeline to Samara which is the main export outlet. Since 2001 this has been complemented by the Caspian Pipeline Consortium’s (CPC) 1,510 km pipeline to the Russian city-port of Novorossiysk on the Black Sea – a more profitable route for the Company and the reason behind our efforts to increase the proportion of exports through CPC.

The 1,000 km Atasu-Alashankou pipeline between Kazakhstan and China became operational in December 2005, with a capacity of 10 million tonnes p.a. (200 kbopd) projected to double in the coming years. Other pipeline routes from Kazakhstan are being considered.

In July 2006 an alternative route has been developed: the first direct pipeline with planned capacity of 50 million tonnes (1,000 kbopd) link between the Caspian and the Mediterranean Sea. The Baku-Tbilisi-Ceyhan pipeline runs through Baku in Azerbaijan to the Turkish port of Ceyhan and began operating in July 2006. This pipeline is a potential alternative route for Kazakhstan’s oil.

The above examples indicate that despite Kazakhstan’s dependence on its neighbours to export its oil overseas, the country enjoys considerable growing and diversified access to the export market. Through our good relations with our parent company, the Company has guaranteed access to the oil transport infrastructure owned by NC KMG.

KMG EP exported 75% of its consolidated sales in 2011 (78% in 2010). During that period access to use of the CPC pipeline accounted for 29% of the Company's consolidated sales volume. The usage of the UAS route was 46% of the Company's consolidated sales volume.

The Company planning to optimize use of available transportation routs for exports. Achieve higher value of domestic shipments.

 

Technologies

The Company regards investment in and implementation of modern technology as a key element of the overall increase of efficiency and, ultimately, the creation of shareholder value in the Company. In the area of production, improved technology, new modelling systems, use of modern equipment and materials, and automation will lead to the optimisation of the field development systems, extending the overhaul period of wells and increasing the lifetime of pipelines. The Company is also in the process of modernising oil collection and preparation stations.

Many technological processes as well as marketing and procurement practices either have been, or are being, improved.

These improvements have gone forward hand in hand with new ecologically-friendly ways of conducting business. So the Company has been able to improve production and revenue levels without damaging the environment or jeopardising the safety of its workers.

 

History

1911

Oil production started in Kazakhstan.

1991

State Corporation “Kazakhstanneftegas” is formed from the oil assets "inherited" from the Soviet Union.

1991-2002

Expansion of private operations in the oil sector: state-controlled assets are grouped into National Company KazMunaiGas (“NC KMG”) (created in 2002).

1997

The Government transferred all of its Shares in EmbaMunaiGas and UzenMunaiGas to KazakhOil CJSC, the Kazakh national oil company.

2002

KazakhOil NC CJSC and Oil & Gas Transportation NC CJSC - the national oil and gas transportation company merged to form NC KMG in February 2002.

2004

Creation of JSC KazMunaiGas Exploration Production: merger of JSC UzenMunaiGas and JSC EmbaMunaiGas.

2005

• Asset restructuring to create an upstream focused company.
• Divestment of a majority stake in Atyrau Refinery (December 2005)
• Reduction of stake in petrochemicals business to 15% from 50% (December 2005).

2006

In September 2006, KMG EP carried out its Initial Public Offering on the Kazakhstan Stock Exchange, along with a placing of global depository receipts (GDRs) on the London Stock Exchange (LSE).

2007

In April 2007 KMG EP acquired a 50% stake in JV Kazgermunai LLP. In December 2007 KMG EP acquired a 50% stake in CCEL (Karazhanbasmunai). In December 2007 KMG EP acquired a 50% shares in CCEL “Karazhanbasmunai”.

2008

NC KMG, KMG EP and BG Group signed an upstream co-operation agreement. The agreement sets out the principles of a joint study of hydrocarbon reserves potential of specific areas in the Republic of Kazakhstan and other countries. The companies will cooperate to identify opportunities across a range of potential oil and gas exploration and production projects.

2009

• In December 2009 KMG EP acquired 33% in PetroKazakhstan Inc
• International rating agency Standard & Poor’s (S&P) awarded to the Company GAMMA-6 corporate governance rating (CGR)

2010

• in July 2010 the Company announced that it reached an agreement with NC KMG to acquire 50% of Kazakhoil Aktobe LLP (“KOA”), 51% of Kazakturkmunai Ltd (“KTM”) and 50% of Mangistau Investments B.V. (“MIBV”), the owner of 100% of the common share capital of JSC “Mangistaumunaigas” (“MMG”). The deals are subject to approval.
• In September 2010 the Company acquired 100% in LLP SapaBarlau Service (currently LLP KMG EP Exploration Assets, KMG EP EA) and 100% in LLP NBK.

2011

• In March 2011 KMG EP acquired 50% in Urals Group Limited, which owns exploration license for the Fedorovskiy block.
• In April 2011 KMG EP acquired 4 exploration blocks from NC KMG: Temir, Teresken, Uzen-Karamandybas and Karaton-Sarkamys.
• In December 2011 KMG EP acquired 100% in JSC Karpovskiy Severniy.

2012

• In January 2012, KMG EP announced its plan to reorganize production facilities UMG and EMG into joint stock companies.
• In addition, in the beginning of the year the Company announced its plan to create 2 servicing companies and recruit about 2,000 employees in Mangistau region.

 

Strategy

JSC “EP “KazMunaiGas” is a leading company in the field of hydrocarbon exploration and production in Kazakhstan, and among the leaders of the oil and gas sector in the Caspian region.

Our mission is effective exploitation of hydrocarbons in order to maximize the benefits to shareholders, whilst providing long-term economic and social benefits for the regions of our operations.

In implementation of its mission [and vision] KMG EP is guided by the following priorities:

1. Safe working conditions of its employees, as well as rational use of natural resources adhering to the best standards of environmental and health protection.
2. Development of human capital, which KMG EP regards as a driving factor in the development and competitiveness of the Company
3. Exploration as a basis for long-term growth of the Company and the way to increasing the resource base.
4. Profitability as a necessary condition for the existence of the Company

The main objective of KMG EP is the increase in shareholder value. KMG EP seeks to achieve value growth through growing reserves and production of hydrocarbons, improving profitability of existing assets, and developing new business opportunities.

1. To increase hydrocarbons production and reserves the Company intends to:

• Maintain current oil production at existing fields

• Increase the recovery rate at existing fields
• Conduct exploration in high prospective exploration areas in Kazakhstan and abroad, and conduct further exploration of existing fields
• Acquire new assets, both in Kazakhstan and abroad, with emphasis on selected priority regions
• Expand the Company’s asset portfolio with offshore projects and natural gas assets

2. Profitability of the existing and new assets will be ensured through:

• Improved cost management

• Improved efficiency of business processes and technological processes, including through their automation
• Implementation of new technologies
• Optimization of asset structure and business management model

3. Development of new business competences will be achieved through:

• Establishing long-term partnership agreements with leading oil and gas companies in exploration, production, and service

• Staff training and development
• Development of own technical and technological expertise, experience of the management in offshore projects, gas business and international assets including through partnerships with large international oil and gas companies.

 

Corporate Governance

World class corporate governance is of vital importance to the success of companies in a free and increasingly competitive market. Companies need an efficient structure, defining the relationships between the Board of Directors, management and shareholders and offering assurance to investors that their funds are being used to strengthen the company, create value and increase market capitalisation. Compliance with these principles has taken on particular relevance since the Company’s IPO in 2006. While the IPO was primarily a capital–raising exercise for the Company, it was also a sign of the commitment to complying with all the financial reporting and corporate governance standards now expected of a truly international oil and gas producer.

The system of Corporate Governance at KMG EP is determined by a number of documents issued and decisions made in 2006.

Kazakhstan Corporate Management Code

The Company adopted the Kazakhstan Corporate Management Code, modified to include certain provisions from the Combined Code (which governs UK listed companies), as its Corporate Governance Code.

Corporate governance best practice in Kazakhstan is set out in the Kazakhstan Corporate Governance Code. The Kazakhstan Corporate Governance Code is based on existing international best practice in the area of corporate governance and sets out recommendations for applying the principles of corporate governance by Kazakhstan joint-stock companies. It was approved by the Expert Council for Securities Market Matters under the National Bank of the Republic of Kazakhstan in September 2002. The Code was also approved by the Association of Financial experts of Kazakhstan in March 2005 and by the Board of Emitters in February 2005.

The Kazakhstan Corporate Management Code is based on existing international best practices in corporate governance and sets out recommendations for applying the principles of corporate governance by Kazakhstan joint-stock companies. It was approved by the Expert Council for Securities Market Matters under the National Bank of the Republic of Kazakhstan in September 2002.

Relationship with the Majority Shareholder

The relationship with the controlling shareholder is one of the key corporate governance issues. KMG EP signed a Relationship Agreement with its parent company NC KMG to ensure that the two companies conduct business in a transparent manner and on an arms-length basis. Under the Relationship Agreement the Company can operate its business independently and in the interests of all its shareholders.

The Company has incorporated certain provisions in its Charter. According to these provisions the Board of Directors now includes three Independent Non-Executive members who assist the Company in implementing good corporate governance arrangements. They are Philip Dayer, Paul Manduca and Edward Walshe.

Many of KMG EP’s activities, transactions, acquisitions, changes in Dividend policy, including those between the Company and NC KMG, can only take place if approved by a majority of the Independent Non-Executive Directors at the relevant meeting of the full Board of Directors.

The three Independent Non-Executive Directors work closely with other Directors and the Management Board to ensure that the Company complies with its corporate governance obligations. The Directors have adopted terms of reference for and have formed an Audit Committee, a Nominations Committee, a Remuneration Committee and Strategic Planning Committe.

Audit, Nominations, Remuneration and Strategic Planning Committees

The Audit Committee focuses in particular on compliance with international and internal legal and accounting standards and controls. It is comprised only from Independent Directors: Philip Dayer, Paul Manduca (Chairman of the Committee) and Edward Walshe.

The Nominations Committee considers the composition of the Board of Directors, retirements and appointments as well as making appropriate recommendations on these issues. Members of this committee are Alik Aidarbayev (Chairman of the Committee), Paul Manduca and Edward Walshe.

The Remuneration Committee has responsibility for making recommendations to the Board of Directors on the Company’s policy on the remuneration of key senior members of the Board and for maintaining reports for corporate governance purposes. This committee members are Philip Dayer (Chairman of the Committee), Paul Manduca and Edward Walshe.

The Strategic Planning Committee is focused on making recommendations to the Board of Directors on the Company’s priority directives and its development strategy. The Committee’s members are Edward Walshe (Chairman of the Committee), Alik Aidarbayev and Askar Balzhanov.

Risk Management Committee

The Risk Management Committee was established by the Management Board on December 27, 2007.

The Committee is staffed by the CEO, First Deputy General Director, CFO, Managing Director of Economy and Finance, Managing Director of Project Development, Managing Director of Information Technology, Managing Director of Personnel and Social Policy, head of the internal audit department, director of health, safety and environmental department.

On January 17, 2008 the Committee has approved the Risk Management Policy for further approval by the Board of Directors. The procedures plan on risk management for 2008 have also been approved by the Committee.

By rigorously following the financial and legal information disclosure requirements of the KASE and the LSE, the Company is becoming more open and transparent and is working more closely with the international teams of financial analysts and the investment community at large.

 

Company Management

The senior management of the Company has significant technical and commercial professional experience in the oil and gas sector and has played a key role in the creation and development of major oil and gas projects in Kazakhstan. They have also taken part in formulating the state development programme for Kazakhstan's sector of the Caspian Sea.The Company’s senior management is:

Chief Executive Officer and Chairman of the Management Board

Alik Aidarbayev was appointed the Chairman of the Management Board (CEO) in December 2011. Mr Aidarbayev graduated from Kazakh Polytechnic Institute named after V.Lenin, has been working in oil and gas industry since 1985 and passed through all stages of professional development in the sphere of oil and gas production. He was a senior geologist, worked as a technologist and oil and gas production foreman at “Zhetybayneft" field office, the division of “Mangyshlakneft”. Over the years, he held senior positions in the production association "Yuzhkazneftegaz”; served as General Director of JSC “Turgai-Petroleum” and JSC “Mangistaumunaigaz”. Since April 2011 was the Managing Director on Exploration and Production of National Company KazMunayGas. He was the Chairman of the Board of Directors of KMG EP since May 2011.

Deputy General Director

Vladimir Miroshnikov has been the Deputy General Director of the Company since April 2004. He had been working in oil and gas industry since 1973 with Uzenneft NSEH as an operator and chief engineer and in the management of Mangistaumunaygas OJSC, JV Karakudukmunay, and since 2002 NC KazMunaiGas.

Deputy General Director for Production

Abat Nurseitov joined the Company in 2006 and has been working as Deputy General Director for Production since January 2012. Prior to this, he worked as Managing Director for Production. He has been working in the oil and gas industry since 1986, starting his career as an oil well operator and progressing to the Head of Zhetybaineft. He has held various managerial posts at NIPIneftegaz, Turgai-Petroleum CJSC, and the Kazakh branch of LukOil Overseas Service. He has been awarded with 100th and 110th Anniversary of Kazakh Oil medals.

Managing Director - Financial Controller

Benjamin Fraser joined the Company in January 2009 as Head of the Internal Audit Department, and from September 2011 has been working as Managing Director - Financial Controller. Prior to joining the Company he worked as Group Risk Manager at Kazakhmys PLC, and has held positions at Deloitte, N M Rothschild & Sons Limited and HSBC Holding PLC. He is a member of the Institute of Chartered Accountants in England and Wales.

Managing Director for Legal Issues

Malik Saulebay joined the Company in April 2011 as Managing Director for Legal Issues. Prior to this worked at KazMunaiGas Refinery and Marketing JSC, KazMunaiGas Trade House JSC, KazTransOil-Service JSC, KazTransGas JSC. He has also worked in various banking and governmental institutions. He graduated from The Kazakh Academy of Labour and Social Relations and The Kazakh State Academy of Management specializing in Law and Business & Management.

Managing Director on Logistics and Contracts

Eldan Salimov joined the Company in April 2004 as Managing Director for Logistics and Contracts. Prior to this, he worked as Deputy Director General at KazMunaiGas Trade House JSC, headed “Balalar Omiri” OJSC and “Kraft” LLP, as well as in other enterprises in the trading sector. He graduated from The Kazakh State Academy of Management and Kainar University.

Director of the HR Department

Botagoz Ashirbekova joined the Company in December 2011 as Director of the HR Department. Prior to this she has held positions in Human Resources at JSC Mangistaumunaigas, JSC Turgai-Petroleum, JSC NK KOR, and in the banking and education sectors. She graduated from Kazan Federal University and has a Ph.D. in Sociology.

 

Board of Directors

The Company operates with two boards, the Board of Directors and a separate Management Board (the executive body). The Chief Executive Officer, who heads the Management Board, is also a director of the Company. He is the only representative of the Management Board who is also a member of the Board of Directors. The Board of Directors therefore only contains one executive member of the Company's management. In order to improve the balance of the Board of Directors, the Company appointed three Independent Non-Executive Directors, being Paul Manduca, Edward Walshe and Philip Dayer at the time of the IPO. The other four members of the Board of Directors, including its Chairman, are representatives of NC KMG.

Acting Chairman of the Board of Directors, General Manager for Production of NC KMG

Sisengali Utegaliyev – graduated Tyumen Industry Institute, geological exploration faculty. From 2009 he has worked as General Manager for Production Projects at National Company KazMunayGas; from December 2007 up to June 2009 - Managing Director for Oil and Gas Production at National Company KazMunayGas. He was an Authorized representative of National Company KazMunayGas in Kazakhoil Aktobe LLP, Chairman of Kazakhoil Aktobe LLP Supervisory Board, Authorized representative of National Company KazMunayGas in Kazakhturkmunai LLP, member of General Meeting and Authorized representative of National Company KazMunayGas in Mangistaumunaigas JSC, member of the Board of Directors.

Chairman of the Management Board of NC KMG

Lyazzat Kiinov - Chairman of the Management Board of NC KMG, was appointed as a member of the Company’s Board of Directors on 27 February 2012. He graduated from Kazakh Polytechnic Institute. He is a Doctor of Technical Sciences and an Academician of the International Academy of Engineering. He has been working in the oil and gas industry since 1971, and has passed through all stages of professional development in the sector. He was an Oil and Gas Production Operator at “Zhetibayneft”, worked as a Chief Engineer of the “Mangyshlakneftepromhim”, as well as a Head of “Karazhanbasstermneft” Oil and Gas Production Department, “Komsomolskneft”. He held senior positions in NC KazMunaiGas JSC, in the Caspian Pipeline Consortium, in the Ministry of Oil and Gas of the Republic of Kazakhstan. Over the years he was a Head of Mangystau oblast. Lyazzat Kiinov has been awarded the “Parasat” Order, and 10th Anniversary of Kazakhstan Independence Medal.

Chief Executive Officer and Chairman of the Management Board of KMG EP

Alik Aidarbayev was appointed the Chairman of the Management Board (CEO) in December 2011. Mr Aidarbayev graduated from Kazakh Polytechnic Institute named after V.Lenin, has been working in oil and gas industry since 1985 and passed through all stages of professional development in the sphere of oil and gas production. He was a senior geologist, worked as a technologist and oil and gas production foreman at “Zhetybayneft" field office, the division of “Mangyshlakneft”. Over the years, he held senior positions in the production association "Yuzhkazneftegaz”; served as General Director of JSC “Turgai-Petroleum” and JSC “Mangistaumunaigaz”. Since April 2011 was the Managing Director on Exploration and Production of National Company KazMunayGas. He was the Chairman of the Board of Directors of KMG EP since May 2011.

General Manager for Legal Affairs of NC KMG

Yerzhan Zhangaulov was appointed Managing Director of NC KMG on 6 June, 2006 and was elected as a director of KMG EP on 12 June 2006. Prior to this appointment he was Executive Director on Legal Support of NC KMG. He also headed the legal service and HR department in the Administration of the President of Kazakhstan and was the adviser to the Vice-President in NC KMG. He obtained a law degree in Karaganda State Institute in 1992.

Chief Financial Officer of NC KMG

Assia Syrgabekova was appointed Managing Director of economics and finances at nc KMG in July 2006 and was elected as a director of KMG EP on 26 March 2010. Prior to this appointment she was First Deputy chairman at halyk Bank from October 2003 as well as the chairwoman of the Management Board of halyk Bank of the Republic of Kazakhstan from 2004 to 2005. From 1998 to 2003 Ms. Syrgabekova worked in the national oil and gas company holding various top management positions in KazakhOil, KaztransGas. She graduated from Kazakh state University’'s Department of Economics in 1982.

Independent Non-Executive Director

Philip Dayer LLB FCA qualified as a chartered accountant with KPMG and then pursued a career for 25 years in investment banking, specialising in advising UK listed companies. He gained extensive experience working for companies such as Barclays de Zoete Wedd and Citicorp. He retired from ABN AMRO Hoare Govett in 2005. Since then he has acted as an adviser to Rosneft on their successful flotation in 2006 and currently sits on a number of boards, including Dana Petroleum and AVEVA Group, as an independent director. Philip joined KMG EP Board of Directors in May, 2010.

Independent Non-Executive Director

Paul Manduca has extensive asset and investment management experience having worked as CEO for companies such as Threadneedle Asset Management, Rothschild Asset Management, Deutsche Asset Management in UK and Europe starting from 1973. Mr Manduca has served on a number of boards as an independent director in the last 10 years and at various points he has headed audit, remuneration and appointment committees of such boards. He holds a Master’s degree from University of Oxford (Modern Languages). He was elected as a director of the Company on 28 August 2006. Paul is the Chairman of the Audit Committee and a member of the Remuneration Committee.

Independent Non-Executive Director

Edward Walshe has over 35 years experience in the oil and gas sector. Mr Walshe has worked in various roles at British Petroleum and British Gas including the overseas exploration and productions operations of these companies in Nigeria, Abu-Dhabi, Central Asia and South-East Asia. Mr Walshe has a PhD in Solid State Chemistry from the University of Dublin. He was elected as a director of the Company on 28 August 2006. Edward is the Chairman of the Stratigy planning committee and a member of the Audit, Remuneration and Nominations Committees.

 

Relationship with NC KMG

JSC KazMunaiGas Exploration Production (KMG EP or the Company) is majority owned by JSC NC KazMunaiGas (NC KMG), the national oil and gas company controlled by the State of Kazakhstan. NC KMG owns about 63% of the Company’s ordinary shares.

KMG EP enjoys excellent relations with its parent company, as evidenced by various agreements between the two. These agreements are based on transparent market principles of interaction allowing KMG EP to act in the interests of all of its shareholders.

Agreements with the parent company also ensure that KMG EP has the right of first refusal on the acquisition of existing onshore oil and gas assets, access to new oil and gas acreage and guaranteed access to pipeline infrastructure.

KMG EP is the only company in Kazakhstan that has these advantages.

 

Dividend Policy

KMG EP has set a dividend policy to pay dividends on its ordinary and preferential shares equal in the aggregate of 15% of profit for the year after tax based on its consolidated IFRS accounts. The Company reserves the right to review and revise its dividend policy from time to time.

KMG EP can not guarantee that it will achieve goals and distribution set out in its dividend policy and any future dividend will only take place should KMG EP consider it to be commercially prudent to do so, having regard to the availability of the Company's distributable profits and the retention of funds required to finance future growth. The dividend policy should not be construed as a dividend or profit forecast. Any changes in the tax treatment of dividends or interest received by KMG EP may reduce the dividend yield received by shareholders.

 

Contact Information

Registered office

JSC KazMunaiGas Exploration Production 
17, Kabanbai Batyr ave. 
Astana, 010000, Republic of Kazakhstan 
Tel.:             +7 (7172) 979 997       
Fax: +7 (7172) 977 426

Public relations

Tel.:            +7 (7172) 977 908       
Yelena Pak 
e-mail: [email protected]

Corporate secretary

(for shareholders enquiries) 
Tel.:             +7 (7172) 975 413       
Fax: +7 (7172) 977 633 
e-mail: [email protected]

Investor relations (for institutional investors’ inquiries)

Tel.:             +7 (7172) 975 433       
Fax: +7 (7172) 975 445 
Asel Kaliyeva 
e-mail: [email protected]

Auditors

Ernst and Young Kazakhstan LLP 
240/G Furmanov Street 
Almaty 050059, Republic of Kazakhstan 
Tel.:             +7 (727) 258 59 60      

Registrar

JSC "Fondovyi Tsentr" 
79 "А", Zheltoksan Street 
Almaty, 050091, Republic of Kazakhstan 
Tel.: +7 (727) 250 89 61 250 89 60 
Fax: +7 (727) 250 16 96