1. KARACHAGANAK PETROLEUM OPERATING B.V.
20 YEARS OF RESPONSIBLE DEVELOPMENT
Good morning ladies and gentlemen!..
I am pleased and honoured to be speaking to you at this session dedicated to Kazakhstan’s two largest international upstream projects and to share KPO’s 20 years-long experience of developing Karachaganak, one of the flagships of the country’s energy sector.
XI KAZENERGY Eurasian Forum
7 September, 2017
Renato Maroli, kpo general director

2. Karachaganak IN NUMBERS
Kazakhstan
Russia
Caspian
Sea
Astana
Black
Karachaganak
Uzbekistan
Turkmenistan
Azerbaijan
Georgia
Turkey
Discovered in 1979
$22 B invested since 1997
45% of RoK’s total gas production
16% of RoK’s total liquids production
2016 production: Mboe
Shareholders
29.25%
18%
13.5%
10%
For those of you who are new to Kazakhstan, Karachaganak is one of the world’s largest oil and gas condensate fields - which is located in north-west Kazakhstan covering an area of over 280 square kilometres.
The Field was discovered in 1979 and it now accounts for 45% of the country’s total gas production and 16% of the total liquids production
KPO is an international consortium comprising international energy giants and the National Oil Company KazMunaiGas 2

3. KEY MILESTONES Karachaganak Field discovered Production commenced
1979
Karachaganak Field discovered
1984
Production commenced
1997
The Final Production Sharing Agreement (FPSA) signed
2003
The President of Kazakhstan inaugurates “First Oil” of Phase II
2004
First shipment of crude oil from Novorossiysk sea terminal via CPC
2007
Gas Sales Agreement signed
2012
KMG becomes partner
2014
142.5 Mboe Production Record
2016
Shell takes over BG Group
Here is a quick tour of the Karachaganak history :
The Final Production Sharing Agreement was signed in 1997 between the first 4 partners
In 2012 the Venture was joined by the Kazakh National Oil Company – KMG, and
Last year Shell joined the Project after acquisition of BG Group
You see there a historic moment on the picture - the President opening the valve for the first oil of Phase II

4. KARACHAGANAK History 1979 Discovery Well 1984 Start production 1991
Dissolution of the USSR marking declining investments
1997
Signing of Final Production Sharing Agreement
Expansion through KPC and Unit 2; increased liquids production
Focus on maintaining liquids production through gas injection and field development

5. OUTLOOK FOR THE FUTURE KEP-1 PEP Sanctioned Projects
PEP - Plateau Extension Projects
KEP1 - Karachaganak Expansion Project
KEP-1
PEP
Sanctioned Projects
Following the completion of the Karachaganak Phase II Initial Program, KPO has been funding and implementing the Phase II Maintenance Program (Phase IIM) since 2003.
This phase includes the further activities, such as drilling new development wells, undertaking workovers on existing wells, upgrading production facilities and other projects required to maintain a high production level to the economic benefit of the RoK.
These additional facilities, field infrastructure and wells are required to avoid the increasing gas-oil-ratio causing the existing facilities to become gas constrained and thus cause a liquids production decline.
In response a programme of production Plateau Extension Projects (PEP) has been developed in 2014. 5 5

6. 20 YEARS OF SAFE SUSTAINABLE PRODUCTION
CARE FOR PEOPLE
HSE Integrated Management System to meet ISO & OHSAS 18001
“World Class” safety performance
Over $181 million invested into HSE training and development of national professionals since 1998
OPITO* Accreditation
The Collective Agreement - one of the best in the industry
KPO prouds itself not only with record production but, on the equal measure, with the achievements in the areas where success is measured in other, and, perhaps, more precious terms.
For years KPO maintains the “World Class” safety performance.
This performance is benchmarked annually against other Oil & Gas companies within the Oil & Gas Producers’ Association (OGP) and this achievement signifies KPO personnel’s commitments to the best safety, health and environmental practices & standards.
KPO has recently achieved 365 days without a Lost Time Injury. That is 26 million man-hours of work, and 38 million km on the road, without anyone receiving an injury.
KPO has been actively engaging its employees to cultivate such a workplace culture where the ownership of safety is shared personally by everyone.
As the largest employer in the Western Kazakhstan Oblast, KPO provides thousands of long-term local jobs with competitive salaries.
By mid-2017 the local content in KPO manpower reached 96% in category Qualified staff and 77% in category Management.
We provide mandatory training courses, ongoing international and professional programs initiated in previous years, and internship at Parent Companies. Since signing of the FPSA over $178 million invested into training and development of national professionals.
In April 2016 a new Collective Agreement was signed between Trade Unions and the Company for the period of Despite the adversity of the general oil & gas market conditions, KPO managed to enhance the terms and conditions of the Collective Agreement: additional provisions related to remuneration, social payments and benefits were added to the Agreement.
20 YEARS OF SAFE SUSTAINABLE PRODUCTION
* Offshore Petroleum Industry Training Organization 6

7. RESPONSIBLE TO ENVIRONMENT
Since 1997, investments into environment have exceeded $342 M
An automatic data collection and environmental monitoring system in and around the Field
In 2016 gas utilisation rate at Karachaganak reached an outstanding rate of 99.84% by flaring only 0.16% of the total gas output which is substantially lower than the average world rate and the average European rate
Total volume of gas flared per 1000 tons of produced output (HC), ton/Kt
For your information, Kazakhstan’s environmental regulations are among the toughest in the world and meeting those is a challenge in itself.
But the Venture goes beyond that and brings in the international expertise of its partner companies to create a synergy between the leading international technologies with the host country’s aspiration to create a “green economy”.
Over the first half of 2017 KPO has achieved a world-class gas utilisation rate of per cent. As you can see from the pie-chart below, KPO is well ahead of the World and European average gas flaring rates.
Overall, since 1998, KPO’s investments into environmental activities have exceeded $342 million. 7

8. Volume of re-used wastewater, m3
WATER REUSE IN KPO
Treated domestic wastewater
Storm and snowmelt wastewater
Total Water Reuse
Volume of re-used wastewater, m3
2015
31,213
2016
48,023
% of water consumption
8.2%
12.8%
Water reuse
Irrigation
Preparation of drilling muds
Filling of fire reservoirs
Dust suppression 8

9. RESPONSIBLE TO THE HOST COUNTRY
100% - skilled/clerical positions
96% - professional/supervisory
77% - managerial level
Human Resources
Since 1997 Local Content share of KPO GWS procurement exceeds $6.32 B
Goods, Works & Services
KPO is dedicating significant resources to support Local Content
KPO is going through a progressive change to the market supply induced by supporting Partnerships/Consortiums between Local and International companies
As the largest employer in the Western Kazakhstan Oblast, KPO provides thousands of long-term local jobs with competitive salaries.
By mid-2017 the local content in KPO manpower reached 96% in category Qualified staff and 77% in category Management. Over the coming years our Kazakh colleagues will be taking over more and more managerial positions…
KPO is one of the first companies in Kazakhstan to successfully introduce a local content programme, which has enabled more than four thousand Kazakhstani companies to get involved in Karachaganak development.
These companies have received orders from KPO for over $6 billion.
As a responsible corporate citizen KPO has been active in attracting investors to the regional and national economy. This is also achieved through creation of joint ventures with local manufacturers. 9

10. LOCAL CONTENT DEVELOPMENT
NKO:
PZTM
PTZ
Petropavl
WKO: $395 M (LC 70%)
KazBurGas
AksaiGasService
KIOS
Pavlodar:
Line pipes
Cables
Aktobe: $13 M (LC 60%)
Smartex
Strotelnaya Initsiativa
Pavlodar
Astana
Astana: $7,3 M (LC 84%)
Uralsk
Karachaganak
Aktobe
EKO: $0,1 M (LC 34%)
Karagandy
Atyrau: $117 M (LC 43%)
RauanNalco
AtyrauNefeMash
Edil-Oral
ZhigerMuniaService
Karagandy: $0,1 M (LC 26%)
Karazhal Operating
Imstalcon
Prolux LED
Boehmer
Atyrau
Almaty: $325 M (LC 56%)
Byelkamit
CAIH power
MSS GE
Kyzyl Orda: $0,3 M
Aktau
Mangistau: $25 M (LC 17%)
Tenaris
Sewon/GMMOS
Almaty
Shymkent
KPO is one of the first companies in Kazakhstan to successfully introduce a local content programme, which has enabled more than four thousand Kazakhstani companies to get involved in Karachaganak development. These companies have received orders from KPO for over $6 billion.
More than 4,100 Kazakh vendors are registered in KPO Supplier Database
More than $6.2 B is LC share in KPO procurement of goods, works and services since 1997
In 1H 2017 the LC share is $ M (51.8%): Goods  $5.8 M (9.9%); Works $54.8 M (53%); Services  $118.3 M (64.4%)
Top management meetings and site visits to 7 oblasts (Karaganda, NKO, Atyrau, Mangistau, Pavlodar, Aktobe, South Kazakhstan oblasts) in under inter-regional cooperation 10

11. RESPONSIBLE TO COMMUNITY
West Kazakhstan Region
$20 M / y
Social infrastructure Projects, e.g.:
Medical Facilities
Schools & Kindergartens
Sport facilities
Cultural Centres
Roads*
Burlin District
$10 M / y
Social infrastructure Projects, e.g.:
Gas & Water Supply projects
Schools & Kindergartens
Roads
“Paryz” National Social Responsibility Award
Burlin District
>$50 k/yr
Community Development Projects, e.g.
In addition, every year KPO implements a big number of large social infrastructure development projects in WKO. The KPO social development programme is focused on the construction of healthcare, education, culture and sports facilities. To date, KPO has allocated $ million to social infrastructure projects in WKO.
These are only few examples of what has been accomplished as part of our social projects program.
For its contribution to the social infrastructure KPO has been awarded Paryz National Social Responsibility Award.
17 social projects completed in WKO and BD for $37 M in 2016 and more than 40 projects are being executed in 2017
$310 M for Social Infrastructure Projects in West Kazakhstan Region since 1998 (inclusive of Burlin District)
* Reconstruction of the roads in (i.e. 22 Km of the Aksai - Field section, 36Km of the Aksai - Burlin section) 11

12. LOCAL INFRASTRUCTURE DEVELOPMENT
KPO continuously pursues local infrastructure development objective:
establishment of weekly Uralsk-Frankfurt flight starting from 14 June 2017 for its rotational personnel
Avg reduction of Km driven is 58% (Jul - Aug)
continuous effort in collaboration with the Local Authorities to improve transportation/infrastructure, thereby reducing impact of travel and increasing safety for both own employees and wider community 12

13. KPO SUSTAINABILITY REPORTING
One of the first companies in Kazakhstan to issue a Sustainability Report
Detailed level of disclosure and meeting GRI G4 guidelines
Our Report is a key tool for communication with all of our stakeholders
The Report is independently assured by Ernst & Young and issued in 3 languages 13

14. THANK YOU 14