1. KMG Investor Presentation
October 2012

2. 1. KMG Group Overview and Recent Developments

3. Representing state interests Diversified asset base
KMG (Baa3/BBB-/BBB-) – Government “Arm” in Kazakhstan’s Oil & Gas Industry
Representing state interests
KMG is fully owned by the Government, through JSC SWF “Samruk-Kazyna”
Represents interests of the Republic of Kazakhstan in the strategically important oil & gas sector
Represents the State in exercising its pre-emptive rights with private industry players in E&P projects
Right to acquire 100% of all new onshore and 50% of offshore fields/licenses
M&A policy aims to strengthen the State’s role in the oil & gas sector and to consolidate control of the domestic oil products’ market
Diversified asset base
Stakes in almost all significant oil & gas assets in Kazakhstan with P1+P2+P3 reserves of 653.7(1) mln tonnes of oil and bcm of gas
Participates directly in equity of 38 oil&gas related companies in Kazakhstan and abroad, while 251 companies make up the group(2).
Control over KMG EP (61.36%)(3), the largest public exploration and production company in Central Asia
Participation in JVs operating and exploring some of the world’s largest oil fields: NCPC (Kashagan) (c.17%), KPO (Karachaganak) (10%) and TCO (Tengiz field) (20%)
Other participations in exploration and production JVs: MMG (50%), KazakhOil Aktobe (50%), KazGerMunai (50%)(4), PKI (33%)(4)
Joint or sole control over the largest oil & gas pipeline networks in Kazakhstan (combined length of 19.9 thousand km)
Joint or sole control over all three refineries in Kazakhstan and two in Romania (combined capacity of 23.3 mmt/year)
Marketing and sales of oil products in Kazakhstan and in Europe
KMG was established in 2002 by the merger of two national companies National Company Transport of Oil and Gas and National Company Kazakhoil.
We are 100 percent owned by the government, and we are also the most important asset of the government in the most strategic oil and gas sector. We enjoy full government support including preemption right on new and existing assets and overall involvement in main oil and gas projects.
KMG is a vertically integrated group operating in every major segment of the industry, including upstream, midstream and downstream.
In upstream we have stakes in all significant oil and gas assets in the country. Our subsidiary, KMG EP, is the largest public oil & gas company in Kazakhstan.
We enjoy almost full monopoly in oil and gas transportation, we control all the three refineries in Kazakhstan and, additionally, two refineries in Romania. We also operate one of the largest retail network in the republic and significant network in Balkan region.
Our goal is to maintain our position as the government’s leading oil and gas company in Kazakhstan and abroad by focusing on the following priorities:
- Increasing group’s overall production through acquisitions and exploration
- Enhancing and diversification of transportation systems by developing new transportation routes
- Enhancing our role in the value chain through marketing of products to final consumers
- Enhancing efficiency of operations through the reorganization of the corporate structure
Key financials
2010 revenue of US$14.24 bn, 2010 EBITDA of US$5.6 bn
2011 revenue of US$17.7 bn, 2011 EBITDA of US$6.8 bn
6M 2012 revenue of US$9.8 bn, 6M 2012 EBITDA of US$3.6 bn
Leading vertically integrated company operating in every major segment of the oil & gas industry, including upstream, midstream and downstream
(1) Gaffney Cline report
(2) Company data
(3) As of October 3rd, 2012
(4) Through KMG EP
KMG Group Overview and Recent Developments 3

4. KMG – Recent Developments
Funding & Liquidity
Strategic Developments
January 2011 – Samruk-Kazyna (S-K) extends a KZT 23.3bn loan (13 yr, 2% p.a.) to KMG for Beineu – Bozoi – Shymkent project financing
July 2011 – KMG successfully acquires a US$ 1bln syndicated loan (5 yr, 3 yr grace, L+2.1%), drawn in 2011 for refinancing purposes
June 2012 – KMG finalizes acquisition of a 10% stake in Karachaganak project, 1/2 of which was financed by a US$ 1bln carry loan from consortium members (3 yr, L+3%), the other 1/2 as a capital injection from S-K
July 2012 – KMG secures a US$ 986m carry loan for Kashagan B.V. (4 yr, L+3%)
2012 – preparation for a transaction with the National Fund of the Republic of Kazakhstan to bring in a US$ 4bln loan. First drawdown to take place in 2013 (for up to US$ 2.5bln) Second drawdown to take place in 2015 (for up to US$ 1.5bln). Funds are to be utilized for refinancing and investment activities.
KMG has arranged credit lines for Atyrau Refinery (US$ 2.94bln) and is in process of arranging credit line for the modernisation of Pavlodar Refinery.
Upstream
The key acquisition was a 10% stake in Karachaganak that was concluded in 2011 and was paid in June 2012 (US$ 1bn). NC KMG also acquired MMG Service companies (Aktauoilservice) with a consideration of US$ 334m
Commercial development at Kashagan to commence in March 2012 and reach optimum production levels before June 2014 (370 ths. barrels per day)
Transportation
Completion and commissioning of AGP – Turkmen gas transit to China
CPC Pipeline expansion project capacities to 67mtpa (twofold) by 2015
Kazakhstan – China pipeline to be increased up to 20 mln. tonnes p.a. through put capacity in near future
Downstream
KMG initiated modernization of its 3 refineries in Kazakhstan, aiming to execute these projects on or before Jan 1, So that the oil products will meet the Euro 5 fuel standards.
Reorganisation
Enhancing operational efficiency
Disposal of non-core assets
Corporate centre to optimise costs
Consolidating core businesses into five segments across legal entities
Deleveraging and optimising financial structure of Rompetrol
Financial performance
KMG demonstrated strong financial performance in 1H2010 with EBITDA up 40% to US$2.8bn year-on-year. We continue to enjoy strong balance sheet with a consolidated cash position of US$3.3bn and additional US$6.1bn of short-term financial assets, primarily bank term deposits.
In 1H2010, KMG successfully raised a 10-year US$1.5bn Eurobond and additional US$1.5bn inter-company loan from KMG EP. Our current debt stands at US$13.4bn which is a 2.7x multiple of our last twelve months EBITDA.
Reorganization
In June 2009, the Board of KMG approved a new strategy to reorganize the corporate structure of the company in order to enhance the operational efficiency. The reorganization assumed divesting of the non core assets and consolidating the core business into five business segments: exploration and production, gas transportation and export, oil transportation, refining marketing and retail, and oil and gas related services. Every business segment is now headed by a separate managing director of NC.
Change to the tax code.
On 13 July 2010, the Government of Kazakhstan re-introduced the export customs duty on crude oil at the rate of US$20 per tonne. The Company does not expect this change to materially impact its 2010 results.
Effective 1 January 2009, Kazakhstan introduced a new tax code, which reduced the corporate income tax from 30% to 20%, to be further decreased to 15% in 2014 onwards.
M&A
We are currently proceeding with transfer of major upstream assets to KMG EP in its role of the main upstream assets consolidator in Kazakhstan. We expect that transfer of 50% in Kazakhstan Aktobe, 51% in Kazakturkmunai and 50% in Mangistaumunaigas will be completed by the end of KMG EP is subject to a US$750 million payment to KMG in return for the assets.
In downstream, we are currently also in negotiations regarding purchase of Helios, the largest gas retail network in Kazakhstan, which was part of the MMG Group.
In August 2010, KMG concluded a partnership agreement which marked our entry into international upstream operations. KMG EP and BG Group agreed to jointly explore the White Bear prospect in the UK North Sea (KMG EP acquired 35% of the license)
Upstream: Consolidation of principal E&P assets under KMG EP
Oil transportation
Refining, Marketing and Retail
Gas Transportation
Oil &Gas Services
KMG Group Overview and Recent Developments 4

5. 2. Kazakhstan Oil Industry Overview

6. Kazakhstan Oil & Gas Industry Overview – Upstream
#15 global and #2 CIS producer
#9 globally in terms of 1P reserves
Tengiz, Karachaganak and Kashagan to provide 70% of oil and 85% of gas production in Kazakhstan
Predominant part of reserves located in Pre-Caspian and Mangyshlak basins – North Eastern side of the Caspian Sea
2011 Global Liquids Production
2011 Global 1P reserves
2011 Production in Kazakhstan
This slide provides a brief overview of the upstream segment of Kazakhstan’s oil and gas industry.
Kazakhstan is number 18 global and number 2 CIS oil producer.
Kazakhstan is number 10 globally in terms of proven oil reserves which stood at c.40bn barrels at the end of 2010.
Oil and gas sector remains one of the key drivers of Kazakhstan’s economy, accounting for 30% of the State revenues and 50% of its export earnings.
Kazakhstan: 1.8 mmboe/d
Kazakhstan: 30 bn boe
Total: 2.1 mmboe/d
Source: Annual BP Statistical Review
Source: Annual BP Statistical Review
Source: Wood Mackenzie
Kazakhstan Oil Industry Overview

7. Kazakhstan Oil & Gas Industry Overview – Midstream and Downstream
Transportation
Kazakhstan is key focal point in the transportation of oil & gas from Central Asia to Europe and China
Kazakhstan transportation networks are largely controlled by KMG
Oil pipelines via KTO – transported 66 mln tonnes of crude oil in 2010, 67 mln tonnes in 2011
Gas pipelines via KTG – transported 102 bln. m cubed of gas in 2010, 111 bln. m cubed of gas in 2011
A number of major pipelines have recently been completed jointly with CNPC, including Kazakhstan-China Pipeline and Asian Gas Pipeline
Infrastructure investments are key for serving international markets in Asia and Europe
Several areas of growth, including upgrades and new pipelines to Russia and China
Refining & Marketing
Refining / Downstream industry is now primarily in KMG’s control
Refineries with max refining capacity of up to 20 mln tonnes per year:
Atyrau: Western region (4.9 mln tonnes per year);
Shymkent: Southern region (5.25 mln tonnes per year);
Pavlodar: Northern region (5.0 mln tonnes per year)
Rompetrol: Romania (5.2 mln tonnes per year)
In 2010, the refineries produced mln tonnes of refined products, while in 2011 this amount reached mln tonnes. Slightly higher results are expected by the end of 2012.
Oil pipelines
Gas pipelines 1
Caspian Pipeline Consortium (CPC) 1
Central Asia-Center (Kaz)
This slide provides an overview of Midstream and Downstream segment of Kazakhstan’s oil and gas industry.
Midstream
Kazakhstan occupies a favorable geographical position as a transit country between major gas producers in Turkmenistan, Uzbekistan and Russia and large gas consumption centers in eastern and western Europe.
Kazakhstan transportation networks are largely controlled by KMG via KTO – oil transportation monopolist and KTG – gas transportation monopolist.
In 2009, KMG completed a number of joint downstream projects with CNPC, including Kenkiyak Kumkol oil pipeline (3rd segment of Kazakhstan - China pipeline) and Asian Gas Pipeline (Turkmen gas transit to China).
Refining and Marketing
There are three refineries in Kazakhstan (Atyrau, Shymkent and Pavlodar) with a total refining capacity of 18 million tones annually. Two of them are controlled by KMG (Atyrau and Pavlodar) and one is equally owned by KMG and CNPC (Shymkent).
In 1H2010 our refineries produced 7 million tones of refined products.
The map at the bottom of the slide shows the map of major pipelines as they currently stand. 2
Uzen-Atyrau-Samara 2
Okarem-Turkmenbashi-Beineu (Kaz) 3
Atasu-Alashankou
Cities
Refineries
Source: Company Data
Kazakhstan Oil Industry Overview 7

8. 3. Business Overview

9. Exploration & Production
Group Structure
100%
Transport
100%
Exploration & Production
Transportation
Refining and Sales
Others
KMG EP – 61.36%(1)
Kazgermunai - 50%
PKI - 33%
CCEL - 50%
TCO - 20%
KPO - 10%
Kashagan %
MMG - 50%
KazakhOil Aktobe - 50%
KazMunaiTeniz - 100%
KazTransOil - 100%
KCP - 50%
Munai Tas - 51%
KazTransGas - 100%
AGP - 50%
KazRosGas - 50%
CPC %(2)
KazMorTransFlot - 100%
Kaz Pipeline Ventures - 100%
KMG RM - 100%
Pavlodar - 100%(3)
Atyrau %
Shymkent %
The Rompetrol Group - 100%
Vega – 54.60%
Petromidia – 54.60%
KPI - 50%
TenizService - 49%
KING (R&D) %
KMG Service - 100%
KMG-TransCaspian - 100%
Here you can see the structure of KMG group with key subsidiaries in all of the segment of activity.
The Government owns a 100% stake in KMG via Samruk-Kazyna National Welfare Fund and the company is certainly the largest subsidiary of the Fund.
In Upstream segment KMG EP, TCO and MMG remain the core assets. Our 17% stake in Kashagan field jointly developed with international majors will become a major contributor to our production in the medium term.
As previously mentioned, KTO and KTG are our main assets in Midstream segment
Our refinery and marketing operations are mainly conducted through KMG Refining and Marketing (previously know as “KMG Trade House”), operating all our refineries in Kazakhstan.
Other assets are primarily comprised of servicing and R&D companies
KMG’s total number of direct subsidiaries is 40 and total number of companies within the group is 251.
As of October 3rd, 2012, as a percentage of ordinary voting shares of KMG EP
19% through the government and 1.75% through Kazakhstan Pipeline Ventures (KPV)
The Company owns a 100% interest in Refinery Company RT (which owns all of the assets of the Pavlodar Refinery and a 58% in Pavlodar Refinery JSC, the entity owning the licences to operate the Pavlodar Refinery). The remaining 42% in Pavlodar Refinery JSC is held directly by KMG RM. Refinery Company RT leases 100% of the assets comprising Pavlodar Refinery to Pavlodar Refinery JSC, which then operates the Pavlodar Refinery
Source: Company Data
Business Overview

10. Key Operational Data
FY 2011:
Average price of $111/bbl which is 40% higher than 2010
Oil production volume slightly decreased due to strikes at the level of KMG EP
Oil transportation volume increased due to an increase at the level of Kazakhstan China oil pipeline.
Gas transportation volume increased due to commissioning of Kazakhstan – China gas pipeline.
Oil processing slightly increased because of implementation of cyclical upgrades.
Oil trading as agent lower because due to general market fluctuations
Forecast:
Oil production increases at KMG EP after increased Capex, acquisition of a 10% stake in Karachaganak and Kashagan’s production start in Q4 2012
Oil transport of CPC and gas transport of AsiaGasPipeline increase in 2012 with start of Kashagan
Oil processed increases in Rompetrol in 2012 after the modernization
Oil traded to increase gradually
Now let’s proceed with a summary of our key operational parameters and results.
Upstream
In 1H2010, KMG and its subsidiaries produced 10.3 million tones of crude oil, demonstrating an impressive growth of almost 20% year on year. Our gas production increased by 18% year on year to 2.2 billion cubic metres.
KMG two principal subsidiaries (KMG EP and TCO) accounted for 66% of total KMG production.
Midstream
In 1H2010 KTO transported 26 million tones of crude oil and KTG transported 55 billion cubic meters of gas.
Downstream
We currently operate 259 petrol stations in Kazakhstan in Astana, Almaty and in West, North and East Kazakhstan, accounting for about 10% of total gasoline retail sales.
Through Rompetrol, we additionally operate additional 1,100 outlets in 7 European countries, including Romania, Bulgaria and France.
Our 1H2010 revenue mix is as follows: Downstream accounts for 62%, Upstream for 22%, Midstream generates about 15% of total revenue.
In terms of Gross Profit Mix in 1H % came from Upstream, 25% from Downstream and 19% from Midstream.
Source: Company data
Business Overview

11. KMG Upstream Snapshot 2011 Oil Production Volumes(1)
2011 Gas Production Volumes
In Upstream, KMG EP remains the main contributor in terms of oil production, accounting for 42% of total volumes in 1H2010. TCO accounted for 24% of total output, followed by MMG with 14%.
TCO is our main gas production subsidiary accounting for 59% of total gas output in 2010, followed by KMG EP with 20%.
Proportionate consolidation of JVs
Source: Company data
Business Overview

12. Major Role in Upstream: KMG EP
KMG owns 61.36% of KMG EP shares(1)
KMG EP is the largest public oil and gas company in Kazakhstan
Listed on LSE and KASE
The Uzen field is the largest oil field of KMG EP and has been in production since 1965
Production to stay stable due to enhanced recovery techniques
Strong free cash flow generation
Modernisation programme launched
Clear strategy to 2020, focussed on maximising shareholder value by increasing reserves, expanding production and improving profitability
KMG EP’s share price evolution (US$)
Through its 61.4% stake, KMG controls Kazakhstan’s largest public oil & gas company.
KMG EP extracts oil and gas from 46 fields located in western Kazakhstan, including the Uzen field which accounts for approximately 68% of the Company’s oil reserves. Second largest field is Emba accounting for 32% of the Company’s oil reserves. Contribution of other fields is marginal.
In 1H2010 KMG produced 4.3 million tones of oil and appr. 400 million cubic meters of gas. As of end 2009 the Company had 231 millions of tones of oil reserves according to Kazakhstan’s methodology.
We expect KMG EP’s reserves and operational results to be further enhanced following transfer of MMG from KMG by the end of 2010.
As mentioned already KMG EP will be taking over Aktobe (50%), Kazakturkmunai (51%) and Mangistau Investments (50%, the owner of 100% Mangistaumunaigas) by the end of 2010
As at October , as a percentage of ordinary voting shares of KMG EP.
*Reserves of UMG, EMG, KGM and CCEL as at 2011 year end, PKI as at 2010 year end
Source: Company data, Bloomberg
Business Overview 12

13. Kashagan - Project Overview
Launched in 2000 and is part of the North Caspian Project Consortium (NCPC)
One of the world’s largest oil fields
The parties to the NC PSA estimate that the Kashagan field has 7 to 9 billion bbl of recoverable crude oil
A+B+C1 reserves of crude oil of mln tonnes attributable to KMG on a consolidated basis
The project development involves building artificial islands in shallow water, with land rigs to drill wells as opposed to conventional platforms
Experimental phase of the project completed, with the construction of five artificial islands in the Caspian Sea and 40 wells, including 32 production wells and 8 injection wells
Production expected to start in March 2013
Final agreement signed in October 2008 with Kazakh authorities implementing operational and governance framework
Replaced single operator with new joint operating entity comprising seven participants
In October 2008, parties agreed to sell approved 8.48% stake to KazMunaiGaz NC for a consideration of US$1.78 billion
Rotating leadership, operatorship to be passed to KazMunayGaz NC on start-up, once development stages are completed (Shell to act as a partner in managing production operations)
According to Amendment №4 of the Project’s development Plan and Budget, which entailed a CAPEX increase of USD 6.9 bln, commercial development to start in March, 2013.
We view our 17% stake in Kashagan as one of the major long-term drivers of KMG’s production growth. Kashagan is one of the largest oil fields in the world with recoverable oil reserves estimated at 7-9 billion barrels (Wood Mackenzie estimate the field’s 2P recoverable reserves at 13 bln barrels of oil equivalent). The results of the well tests and the findings of subsurface studies support estimates for a full field production of up to 1.5 million bbl per day.
We own a stake in Kashagan as a part of NCPC consortium together with global majors bringing in international expertise of developing complex offshore projects.
The phased development plan of the Kashagan Field provides for the drilling of 240 wells and the construction of production plants located on artificial island, which will collect production from other satellite artificial islands. The experimental phase of the project has been completed, with the construction of five artificial islands in the Caspian Sea and a total of 40 wells.
Production at Kashagan is scheduled to be launched in 4Q2012.
KMG will manage production operations jointly with Shell Kazakhstan Development B.V. As shown on the graph, other parties will assume responsibility for onshore and offshore development, and drilling.
Current participation overview (NCPC)
Source: Company data
Business Overview 13

14. Karachaganak Project (KPO)
Overview
Karachaganak is a giant oil and gas condensate field in north west Kazakhstan, discovered in 1979
The Karachaganak Project (KPO) is a Production Sharing Agreement (PSA) originally singed in November 1997 for a term of 40 years between the Republic of Kazakhstan (RoK) and a group of foreign contracting companies: BG Group (32.5%), Agip (32.5% ), Chevron (20%) and Lukoil (15%).
Under the terms of the PSA, British Gas and Agip are the sole operators of the project
In 2011, the RoK and the contracting companies reached an agreement on the transfer of a 10% share of Karachaganak Project
The agreement became effective in June 2012, with KMG acquiring a 10% share of KPO
KMG, together with the other PSA participants, will support the 3rd phase of the development of the Karachaganak field
Since the beginning of the PSA, the field has produced around 146 billion cubic meters of gas and more than 108 million tons of liquid hydrocarbons
The total geological reserves of the Karachaganak field are 1,381 billion cubic meters of gas and 1,241 million tons of liquid hydrocarbons
The total recoverable reserves of the Karachaganak field are 929 billion cubic meters of gas and 483 million tons of liquid hydrocarbons
We view our 17% stake in Kashagan as one of the major long-term drivers of KMG’s production growth. Kashagan is one of the largest oil fields in the world with recoverable oil reserves estimated at 7-9 billion barrels (Wood Mackenzie estimate the field’s 2P recoverable reserves at 13 bln barrels of oil equivalent). The results of the well tests and the findings of subsurface studies support estimates for a full field production of up to 1.5 million bbl per day.
We own a stake in Kashagan as a part of NCPC consortium together with global majors bringing in international expertise of developing complex offshore projects.
The phased development plan of the Kashagan Field provides for the drilling of 240 wells and the construction of production plants located on artificial island, which will collect production from other satellite artificial islands. The experimental phase of the project has been completed, with the construction of five artificial islands in the Caspian Sea and a total of 40 wells.
Production at Kashagan is scheduled to be launched in 4Q2012.
KMG will manage production operations jointly with Shell Kazakhstan Development B.V. As shown on the graph, other parties will assume responsibility for onshore and offshore development, and drilling.
Current participation overview (KPO)
Source: Company data
Business Overview 14

15. Major Role in Upstream: TCO
Overview
Established in 1993 to develop the Tengiz field, which is operated by Chevron
Crude oil reserves of mln tonnes, which are attributable to KMG’s 20% share
KMG’s stake is 20%
Veto right over major decisions, chairmanship of the management committee
Dividends from TCO represented approx. 70% of total dividends for KMG over the last three years
Export via CPC pipeline and railways
Major growth in production since the completion of 2nd generation plant in 2008
TCO is undertaking future generation expansion project in the Tengiz Field after receiving all the necessary approvals by the appropriate regulatory authorities and partners. The project is expected to further increase TCO’s oil field production and plant processing capacity.
The cost of the project is expected to be up to US$18bn and is expected to be completed in 2018
Ownership Structure
TCO owns the single largest production field in Kazakhstan and is the Company’s most significant joint venture in terms of oil production.
The company is operated by Chevron holding 50% in the JV.
TCO’s core asset is the Tengiz Field, with production started in 1991.
Tengiz has estimated ABC1 reserves of 216 million tonnes of oil attributable to KMG, representing 29% of our total ABC1 crude reserves.
TCO is progressing with implementation of a major expansion programme with over US$7bn invested into capex to date. Once completed, Tengiz is expected to increase its oil production capacity to 12 million tonnes annually.
20% attributable to KMG
Source: Company data
Business Overview

16. Control Over Midstream: KazTransOil & KazTransGas
KTO
Natural monopoly oil pipeline operator in Kazakhstan
7,498 km of pipelines
Operates three transportation companies: KTO, KCP and MunayTas
KTO’s major asset is the Uzen-Atyrau-Samara (connection to Transneft) pipeline
KCP is a joint venture between KTO and CNODC (50/50%) – pipeline to China
MunayTas is a joint venture between KTO and CNPC E&D (51/49%)
Following the completion of Kenkiyak-Kumkol Pipeline (1 of the 3 sections of the pipelines to China) in October 2009 KTO is now able to transport crude from western Kazakhstan to China
Transported 66.9 mln. tonnes of oil in 2011
Oil & Gas Transportation
KTG
Operates the largest gas pipeline network in Kazakhstan through ICA
The major asset is the Central Asia-Centre gas pipeline (CAC) from Turkmenistan to Russia
Large projects:
Asia Gas Pipeline will increase capacity to 30 bcm per year by the end of 2012
Improved gas transportation logistics with the completion of first stage of the South West Pipeline (up to 6 bcm p.a.). Second stage expected to complete in 2016, increasing capacity up to 10bcm p.a.
Terminals / Infrastructures
Shuttle vessels
Existing oil pipelines
The slide provides a more detailed overview of our major midstream subsidiaries KTO and KTG.
KTO
KTO operates the largest crude oil pipeline network including three major pipelines:
* Uzen-Atyrau-Samara (UAS) pipeline delivers crude oil to Russia’s Transneft pipeline network for further delivery to ports on the Black Sea or to Europe.
* MunayTas JV with CNPC where KMG holds 51%. MunayTas operates the Kenkiyak-Atyrau pipeline connecting to the UAS pipeline and the CPC pipeline extending from the oil fields in Western Kazakhstan through Russia to CPC’s export marine terminal on the Black Sea near the Russian port of Novorossiysk.
* Kazakhstan China Pipeline JV (CPC) – 50/50 joint venture between KTO and CNODC. KCP constructed the Atasu-Alashankou pipeline and the Kenkiyak-Kumkol pipeline, comprising two of three pipeline systems forming the KC Pipeline built to create a transport corridor for the export of Kazakhstan oil to China.
KTG
KTG operates the largest gas pipeline network in Kazakhstan.
The ICA’s pipeline network includes Central Asia Centre pipeline – the shortest route for Turkmenistan and Uzbekistan gas to Russia and further to Europe. The length of ICA’s network is 12.6 thousand km.
KTG has a 50% stake in Asia Gas Pipeline JV with CNPC formed to construct and operate the Asia Gas Pipeline across Kazakhstan, transporting gas from the Central Asian countries to major consumption regions in Southern Kazakhstan and to China. In December 2009, the JV completed first phase of the project comprising a pipeline with a throughput capacity of 10 bcm per year.
New oil pipeline projects
Gas pipelines
Refinery
Source: EIA
Business Overview

17. Consolidated Downstream: KMG Refining and Marketing
KMG Refining and Marketing(1) (“KMG RM”) is the 100% owned principal refining and trading company of the KMG group
An integrated downstream arm of KMG
KMG RM’s strategy:
Increase sales volume to utilise spare capacity of refineries
KMG RM’s principal refinery assets:
Dedicated investments in gas stations resulted in 2nd largest retail network in Kazakhstan (e.g. 299 stations and c.8% market share)
In June 2009, KMG acquired the remaining 25% of Rompetrol, Romania’s 2nd largest oil group
In September 2010, KMG’s ownership (which is held through Rompetrol) in Rompetrol Rafinare (owning Petromidia refinery) was reduced to 54%
Volumes Produced (ktonne) in 2011
Refinery
KMG RM Ownership
Designed Refining Capacity (mln tonnes/year)
Atyrau (Kazakhstan)
99.17%
4.9
Shymkent (Kazakhstan)
49.72%
5.25
Pavlodar (Kazakhstan)
100.00%
5.0
Petromidia (Romania)
54.60% (2)
4.90
Vega (Romania)
0.3
Product mix of KMG RM Refineries in 2011
KMG Refining and Marketing (previously know as KMG Trade House) is our key downstream entity
KMG RM’s principal operations include refining of crude oil, operatorship of filling station networks and oil and refined products trading.
In 1H2010 KMG RM produced 8.1 million tonnes of refined oil products.
In addition to operations in Kazakhstan, KMG RM is the subsidiary controlling our downstream operations in Europe
Most of KMG RM’s refinery continued to operate at capacity utilisation levels of 80-90% in 1H2010.
It is worth mentioning, that Pavlodar Refinery has recently performed its most extensive general maintenance since the start of the post-Soviet period, which included replacement of major production equipment, as well as utilities and infrastructure repairs. The completed works allow the refinery to perform a full transition to production of Euro 2 diesel fuel.
In August 2010, KMG’s ownership in Rompetrol Rafinare (owning Petromidia refinery) was reduced to 54%
In connection with the purchase of the Pavlodar Refinery, KMG is also considering the purchase of the Helios filling station retail network, the largest downstream company in terms of volume of refined products sold in Kazakhstan
Previously KMG Trade House
Via Rompetrol
Source: Company data
Source: Company data
Business Overview

18. 4. Financial Summary

19. Financial Summary of Core Assets(1)
100%
100%
National Company
KazMunayGas
100% ownership:
Investors’ Change of Control Put if Government ownership drops below 100%
On this slide we show how KMG’s major subsidiaries are structured and their relative importance in terms of assets, cash, EBITDA and debt.
KMG is a holding company with $37 billion of assets and $9.4 billion of cash and short-term financial assets as of 31 June KMG’s consolidated EBITDA over last twelve months (2H2009-1H2010) reached US$4.9 billion.
Clearly, KMG EP is the most important in terms of assets, cash and EBITDA. It is the key unleveraged cash source controlled by KMG.
KTO and KTG represent very stable revenue / EBITDA stream from transportation fees. The leverage level of KTO is equal to zero as KTO has repaid the only significant debt facility it had.
KMG RM is a trading arm that holds all downstream and refinery assets. High level of leverage of KMG RM is mainly a result of Rompetrol acquisition and debt at the level of Rompetrol.
20% investment in TCO is the main cash generating asset for the holding company.
The 4 assets in highlighted area are the subsidiaries which are fully controlled by the Company. KMG will maintain such control as this constraint is stipulated in existing bond covenant package.
Overall we want to stress that KMG is 100% government owned and investors have a right to put the bonds back at par if the Government ownership drops below 100%.
Financial Summary

20. Financial Performance
Revenue (US$ mn)
Adj. EBITDA (US$ mn)
Capex
(US$ mn)
Total Debt and Leverage
(US$ mn and Multiple)
On this slide we will present you the financial overview of KMG Group.
In 1H2010, KMG revenues increased by 39% year-on-year to US$6.9 billion on the back of stronger oil price environment and improvement in sales volumes, particularly in refined oil products (with a marginal decline in the volumes of crude sales).
Our EBITDA grew in line with revenue to US$2.8 billion with EBITDA margin of about 40%.
In 1H2010, our capex remained in line with the same period of The Company’s most significant capital expenditures included the North Caspian Project, KMG EP capital expenditures to facilitate production levels, modernisation of the KMG RM refineries including the construction of an aromatic hydrocarbons production complex at the Atyrau Refinery, upgrades to the KTG and KTO pipeline systems and the reconstruction at the Petromidia Refinery.
The Company’s total debt/LTM EBITDA ratio decreased slightly to 2.7x, which is justified by our continuous focus on expansion through acquisitions and organic growth.
Source: KMG’s audited financials, Company data
Financial Summary

21. Historical and Planned Capex
Historical Capex (US$ mln)
2011 Total Capex Breakdown
2009 project CAPEX/Maintenance CAPEX – 60%/40%
2010 project CAPEX/Maintenance CAPEX – 65%/35%
2011 project CAPEX/Maintenance CAPEX – 68%/32%
Our most significant capital expenditures year to date included:
* Kashagan project development
* KMG EP capital expenditures to facilitate production levels
* Modernisation of the KMG RM refineries including the construction of an aromatic hydrocarbons production complex at the Atyrau Refinery
* Upgrades to KTO and KTG pipeline systems
* Reconstruction of Petromidia Refinery
We expect our future capex programme to remain focused on upstream production expansion and modenization. As previously, Kashagan cash calls are expected to remain major contributors to total capex with a 39% out of the estimated US$19 billion.
KMG EP’s production improvements are estimated to account for approximately US$4bn of our total capex in
KMG RM is expected to account for 16% of our planned capex, including deep production of aromatics and processing plant at Atyrau refinery and further reconstruction at Pavlodar refinery.
Source: Company data
Financial Summary 21

22. KMG Group Debt Breakdown and Financing Policy
Scheduled Debt Maturities (US$ mn)
KMG’s future financial policy
Objectives of financial management:
Monitor leverage and take steps to reduce or term out debt
Maintain optimal working capital position at the subsidiary level
Maintain high level of financial flexibility of KMG group
Finance projects without using balance sheet:
Non-recourse project financing
JV partner taking majority of financing burden
Acquisition financing with limited recourse to acquired asset and its dividend flow
Borrow at the KMG level and use this liquidity as needed by different parts of the group
KMG’s financial policy targets
Total Debt / EBITDA < 3.5x
Net Debt / Net Capitalisation < 0.5
Debt Breakdown
By Currency By Interest Rate
The slides gives snapshot of KMG group’s current debt and financing policy.
The Company’s total borrowings increased by about 8% to US$13.4 billion in 1H2010. The increase was principally due to the issuances of the Series 4 Notes, guaranteed by the Company under the Programme, and to the domestic bond.
The borrowings were partially offset by the partial repayment of the KMG RM Facility, as well as the Repurchase Transaction from the National bank of Kazakhstan and the full repayment of the loan received from the Japanese Bank of International Cooperation.
The proceeds from the upcoming transaction will be used to refinance upcoming maturities and fund the upcoming Capex requirements
KMG management has outlined a revised financial strategy in order to mitigate the impact of negative global economic conditions by:
* Reducing administrative costs and implementing operational and capex cost management polices;
* More closely evaluating financial and operational risks in order to avoid large exposures to the banks and
* Financing operational and capital expenditures for ongoing projects with revenues streams from profitable subsidiaries.
* Apart from traditional banks and capital markets KMG employs such financing instruments as non-recourse project financing, JV partner taking majority of financial burden, carry financing, acquisition financing with limited recourse to acquired asset and its dividend flows.
Financial Summary

23. 5. Investment Highlights

24. Investment Highlights
Most significant asset of the Government
Significant portfolio of large-scale exploration projects onshore and offshore to drive long-term production growth (e.g. Kashagan)
Strategic pre-emptive rights
Largest oil producer in Central Asia
Midstream: control over oil and gas pipeline infrastructure
Downstream control: downstream capabilities including three major refineries across Kazakhstan and Rompetrol assets in Europe
High Strategic Importance to the Government
Vertically Integrated Group
To end the presentation, we would like to highlight the key strengths of KMG:
* Strong support from the Government, which has an indirect 100% interest in the Company as well as full ownership in some of the strategic transportation, refining, and other assets
* Largest producer of crude oil in Kazakhstan and the owner of significant interests in many of the largest oil and gas projects in Kazakhstan
* Beneficiary of the Government’s pre emptive right to acquire interests in Subsoil Use Agreements when offered for sale (Article 71) or when the entities that benefit from such agreements are offered for sale.
* Monopolist operator of Kazakhstan’s extensive oil and gas pipeline networks
* Joint or sole control of all three Kazakhstani refineries and two refineries in Romania
* Significant oil & gas product distribution capabilities through one of the largest retail networks in Kazakhstan as well as Romania
Thank you for your attention. We are now happy to take questions.
Investment Highlights