Annual report of “KazMunayGas Refinery and Marketing ... · Director at "KazTransOil" JSC,...

1

EnclosureNo.____

to minutes of board of directors

«KazMunayGas»NC JSC

Dated «__» «______________» 2015

minuteNo. ____

Annual report of

“KazMunayGas – Refinery and Marketing”

Joint-Stock Company for 2014

Astana – 2015

2

CONTENTS

Notes 3

1. ABOUT THE COMPANY

1.1 History of the company establishment

1.2 Mission

1.3. Vision

3

3

3

1.4 Performance overview

1.5 Strategic goals

1.6 Key activities

3

4

4

2. CORPORATE GOVERNANCE

2.1 Members of board of directors of KMG-RM

2.2 Members of management board of KMG-RM

3. AIMS AND GOALS OF JSC “KAZMUNAYGAS – RM” STRATEGY FOR PERIOD

OF 2014-2022

3.1. Consolidated financial and economic indicators of JSC ―KazMunayGas – RM‖ according

to the results of 2014

3.2. Key events in 2014

3.3. Capital structure of JSC ―KazMunayGas – RM‖

4. KEY RESULTS OF FINANCIAL AND OPERATING ACTIVITIES

4.1Financial results for 2012-2014

4.2Oil refining

4.3 Competitive benchmarking of company's activity over the past period

4.4 Investment projects for development of Oil refinery

5

8

9

11

12

14

15

17

19

4.5Sales of oil products 25

4.6 Export and transportation

27

5. SUSTAINABLE DEVELOPMENT 28

5.1. Personnel 29

5.2. Sponsorship and charity 30

5.3. Environmental security 30

5.4. Occupational safety and health 32

Governance structure (as of December 31, 2014) 33

6. CORPORATE GOVERNANCE (continuation) 34

6.1. Criteria for selection of Members of board of directors and management board

6.2. Shareholders’ equity

Plans of JSC ―KazMunayGas – RM‖ for the 2015

38

39

39

7. RISK MANAGEMENT

39

8. CONSOLIDATED FINANCIAL STATEMENTS 42

Appendix 1. List of material transactions and transactions with related parties

Contact information

50

54

3

NOTES

Terms «KazMunayGas – RM» JSC, KazMunayGas - RM, KMG-RM, the Company in the

annual report refer to the parent company of KMG RM Group –«KazMunayGas – Refining and

Marketing» Joint Stock Company. The KMG – RM Group means a Group of Companies consisting

of JSC KazMunayGas – Refining and Marketing and its subsidiaries and related entities.

Terms «KazMunayGas» NC JSC, the Sole shareholderand NC KMG refer to the Joint Stock

Company ―National company KazMunayGas‖. Accordingly, the term KazMunayGas Group means

«KazMunayGas» NC JSC and its subsidiaries.

The term ―downstream‖ means activities associated with processing and marketing of

hydrocarbons.

ABOUT THE COMPANY

History of the company establishment

In 2002, Trade House ―KazMunayGas‖ Limited Liability Partnership – subsidiary of Joint Stock

Company ―National Company KazMunayGas‖, which was soon reorganized into a closed Joint Stock

Company and later into a Joint Stock Company, was established to organize and carry out

transportation and trading of oil and its derivatives in the Republic of Kazakhstan and abroad.

In 2010, Joint Stock Company Trade House ―KazMunayGas‖ was renamed into Joint Stock

Company ―KazMunayGas – Refining and Marketing‖.

Mission

Development as a competitive, high performance innovation and technological downstream

company;

Ensuring of oil refiningcapacity and production of high-quality oil products

Stabilization of domestic oil products market of the Republic of Kazakhstan by means of

marketing of oil products through the extensive marketing channels.

Vision

JSC KazMunayGas – RM a high performance innovation and technological downstream unit of

JSC NC KazMunayGas, who holds streamlined oil refining assets and extensive channels for the

marketing of oil products, Kasakhstan's leader in the field of refining and sales of oil products.

Performance overview:

Oil refining and production of oil products; Marketing of oil products;

Innovation and technological development;

Corporate managenment;

Social responsibility.

Strategic goals:

Increase in oil refining capacity and efficiency, and quality of output;

4

Bringing oil refinery's business process management to the level of leading peers in the

industry;

Achieving stabilizing share in the oil products retail market of 32% by 2022;

Maintenance of quality and stability in supplying of oil products to KMG-RM group;

Development of extensive channels for oil products marketing;

Improvement of innovative and technological development management system;

Improvement of operational processes efficiency through the introduction and implementation

of new technologies and new manufacturing plants;

Improvement of efficiency of KMG-RM group corporate governance;

Regulation of social-labor relationships on the basis of social partnership;

Improvement of personnel policy and human resource development;

Ensuring of safety in the workplace and reduction of environmental risks.

Key activities:

Management of oil refining assets in Kazakhstan;

Analysis and forecast of changes in overall environment in the global and domestic market of

oil, gas, and their derivatives; Participation in the development and implementation of state and industry programs for oil and

gas sector development;

Carrying out export and import of oil products and other goods (works, services); Wholesale and retail sales of oilproducts, gas (including lubricating oils and fuel and

lubrication materials), and other goods (works, services);

sales of compressed natural (dry) gas and liquefied gas (LNG), propellant, pentane-hexane

fraction (PHF); Operation of compressors, boilers, pipelines and gas pipelines under pressure;

Сonstruction and assembling operations on gasification of settlements and commissioning of

gasoline service stations; Construction, maintenance, operation and repair of petrol filling stations (PFS), oil depots and

gas filling stations (GFS), natural gas vehicles refueling compressor stations (NGVRCS), gas-

filling points (GFP), intermediate depots of gas bottles (IGBD), group tank units (GTU),

stationary and mobileautomatic gas refueling stations (AGRS);

AGRS, road tank cars and motor vehicles refueling with compressed and liquefied gas, as well

as with motor fuel.

5

CORPORATE GOVERNANCE

Members of Board of directors of KMG-RM (as of December 31, 2014):

Syrgabekova Assiya Narimanovna

Chairman of the Board of Directors

— Born June 22, 1960 in Karaganda oblast

— Managing director for economy and finance at NC «KazMunayGas» JSC

— Deputy General Director for economy and finance at «KazTransGas» CJSC

— 1st Deputy General Director at «Intergas Central Asia» CJSC

— 1st Deputy Chairman of Board, Chairman of Board at «Halyk Bank of Kazakhstan» JSC

— Managing director for economy and finance at NC «KazMunayGas» JSC

— Financial director at NC «KazMunayGas» JSC

— Member of the Board of Directors at EP «KazMunayGas» JSC

— 2013 – to present – Managing director for investment and risk management at NC «KazMunayGas»

JSC

Tiyessov Daniyar Suinshilikovich General Director (Chairman of Board)of JSC «KazMunayGas – RM»

— Born December 6, 1970 in the city of Tselinograd

— Deputy director of department of NC«KazMunayGas»CJSC petroleum chemistry development

— Financial director at «ATYRAU REFINERY» LLP

— Head of capital construction department at «ATYRAU REFINERY» LLP

— Deputy General Director for production at «TH «KazMunayGas» JSC, «KazMunayGas Onimderi» JSC

— Managing director for refinery and marketing at NC «KazMunayGas» JSC

— Deputy Chairman of the Board at NC«KazMunayGas» JSC for refinery and petroleum chemistry

— At the present – General director (Chairman of the Board) at «KazMunayGas-refinery and marketing»

JSC. Also – Deputy Chairman of the Board for refinery and oil marketing at NC «KazMunayGas» JSC

Abduov Nurlan Kanatovich Member of the Board of Directors

— Born February 3, 1977 in the city of Almaty

— Vice-president at Union of Chamber of Commerce and Industry

— General director at «GazImpeks» CJSC

— General director at «KazStroyServis» CJSC

— General director, consequently chairman of board at SAT & Company

— Chairman of the Board of Directors at «Kazakhstan PetroChemical Industries» JSC

— Member of the Board of Directors, independent director at «Intergaz Central Asia» JSC

— At the present — Chairman of the Presidium of the Kazakh Geographic Society

Okayev Yerkebulan Kabievich Member of the Board of Directors

— Born June 10, 1970 in the city of Almaty

— Chairman of Board at «Kazakhstan Investment Bank» OJSC

— General director at«New way investmet» LLP

— Member of Board, 1st deputy Chairman of Board at «Eurasian Bank» JSC

— Member of Supervisory Board at «Allur Auto» LLP

— Independent member of the Board of Directors at«Troika Dialog Kazakhstan» JSC

— Independent director at «KazMunayGas Onimderi» JSC

— At the present member of the Board, first deputy chairman of the board of «Eurasian Bank» JSC.

Tanatarova Shara Bakytzhanovna Member of the Board of Directors

— Born on November 30, 1978 in Zhana-Ozen of Mangistau region

— Chief specialist of department of corporate finance, manager of department of corporate finance, chief

manager of department of corporate finance, 1st category m of department of corporate finance at NC

«KazMunayGas» JSC

— Director of department of corporate finance, managing director of «KazMunayGas – refinery and

marketing» JSC

— Director of corporate finance and asset management, NC «KazMunayGas» JSC

— At the present director of asset management department of NC «KazMunayGas» JSC.

6

Members of management board of KMG-RM (as of December 31, 2014):

Tiyessov Daniyar Suinshilikovich General Director (Chairman of Board)of «KazMunayGas – RM»JSC

– Born December 6, 1970 in the city of Tselinograd

– Deputy director of department of NC«KazMunayGas»CJSC petroleum chemistry

development

– Financial director at «ATYRAU REFINERY» LLP

– Head of capital construction department at «ATYRAU REFINERY» LLP

– Deputy General Director for production at «TH KazMunayGas»JSC, KazMunayGas

Onimderi JSC

– Managing director for refinery and marketing at NC «KazMunayGas» JSC

– Deputy Chairman of the Board at NC«KazMunayGas» JSC for refinery and petroleum

chemistry

– At the present – General director (Chairman of the Board) at «KazMunayGas-refinery

and marketing» JSC. Also – Deputy Chairman of the Board for refinery and oil marketing

at NC «KazMunayGas» JSC

Kozhabayev Yerbolat Omirserikovich

First Deputy General Director – Member of the Management Board – Born November 30, 1977 in the township of Aktogay of Karaganda oblast

– Director of the department of legal security and contract monitoring at TH

«KazMunayGas» JSC

– Executive director (for legal security) at TH «KazMunayGas» JSC

– Executive director (for retail network development) at TH «KazMunayGas» JSC

– 1st Deputy General Director at «KazMunayGas Onimderi» JSC

– General Director at «KazMunayGas Onimderi» JSC

– At the present — 1st Deputy General Director at «KazMunayGas – refinery and

marketing» JSC

Bekturov Rustem Sabitovich

Deputy General Director for production – Member of the Management

Board – Born January 1, 1963 in the city of Alma-Ata

– Executive director at «Pavlodar Oil Chemistry Refinery» JSC

– Deputy General Director at «KazRosGaz» CJSC

– Deputy General Director of oil refinery and petrochemistry at «EP KazMunayGas» JSC

– Chairman of the Board of Directors at «Pavlodar Oil Chemistry Refinery» JSC

– At the present Deputy General Director for production at «KazMunayGas – refinery and

marketing» JSC

Musaybekov Muratzhan Zhunusbekovich

Deputy General Director for development – Member of the Management

Board – Born January 7 1974 in the city of Alma-Ata

– Deputyvice-president for commerce, executive director — member of board at

«Vasilkovskiy mining and concentrating company» JSC

– Generalmangerfor project of oil products marketingatNC«KazMunayGas» JSC

– Deputy General Director for marketing at«KazMunayGas –RM»

– At the present Deputy General Director for development at«KazMunayGas –RM»

7

Mazhenov Mukhit Muratovich

Deputy General Director for transformation – Member of the Management

Board – BornOctober 2, 1971 in the city of Alma-Ata

– Director of the Department of budgeting and indicative planning, director of indicative

planning and economic analysis of NC «KazMunayGas» JSC

– Adviser of Akim of Mangistau region on economic issues

– Director at «Morport Aktau» administration of the special economic zone

– Deputy General Director for development at «Tengizservis» LLP, for the period of 2005

- 2007 - Deputy Director for economics and finance at «Intergas Central Asia» JSC

«Atyrau» gas transmittal pipelines administration

– First Deputy Chairman of the Board at «KazTransGas-Almaty» JSC, Deputy General

Director at "KazTransOil" JSC, General Director at «KMG-Transcaspiy» LLP

– Financial Director at «Pavlodar Oil Chemistry Refinery»LLP

– At the present Deputy General Director for transformation at "KazMunayGas - RM"

Koybagarov Yerlan Alykhanovich

Deputy General Director for Marketing - Member of the Management Board – Born November 14, 1979.

– Deputy director of department of petroleum products supply at «Trade House

KazMunayGas» JSC

– Director of department of petroleum products delivery, managing director of

«KazMunayGas Onimderi» JSC

– Acting Managing Director of Export and Logistics, Managing Director for the Internal

Market, Director of Marketing of petroleum products at«KMG-refinery and marketing»

JSC

– Deputy General Director for Marketing at «KazMunayGas Onimderi» JSC

– Commercial Director of «KazMunayGas - refinery and marketing» JSC

– At thepresent Deputy General Director for Marketing at «KazMunayGas - refinery and

marketing» JSC

Kabdushev Asset Daurenbekovich

Managing director for legal security – Member of the Management Board – Born on April 12, 1982 in Kokshetau oblast.

– Chief manager of sector of claim service of Department of legal security at

«KazMunayGas Onimderi» JSC

– Manager of department of legal security, director of department of legal security at

«KazMunayGas» JSC

– At the present Managing director for legal security at «KazMunayGas-refinery and

marketing» JSC.

8

AIMS AND GOALS OF JSC “KAZMUNAYGAS – RM” STRATEGY FOR THE PERIOD OF

2014-2022

Strategic direction 1 – Oil refining and production of oil products

Within this strategic direction, the "KazMunayGas - RM" JSC establishes following strategic goals:

1. Increase in oil refining capacity and efficiency, and quality of output;

2. Bringing oil refinery's business process management to the level of leading peers in the

industry.

Strategic direction 2 – Marketing of oil products


1. Achieving stabilizing share in the oil products retail market of 32% by 2022;

2. Maintenance of quality and stability in supplying of oil products to KMG-RM group;

3. Development of extensive channels for oil products marketing.

Strategic direction 3 – Innovation and technological development


1. Improvement of innovative and technological development management system;

2. Improvement of operational processes efficiency through the introduction and

implementation of new technologies and new manufacturing plants.

Strategic direction 4 – Corporate governance

KMG-RM establishes goals to improve the efficiency of KMG-RM group corporate management. To

achieve this goal, KMG-RM will focus on the following objectives:

1. Increase in Company value;

2. Centralization of subsidiaries management on the basis of the corporate center of KMG-RM;

3. Development of united information space;

4. Cost management;

5. Financial stability management;

6. Formation of assets target structure;

7. The development of risk management system;

8. Assistance in development of local content.

Strategic direction 5 – Social responsibility

The strategy of KMG-RM to improve corporate social responsibility and human capital development

will be carried out through the following goals:

1. Regulation of social-labor relationships on the basis of social partnership;

2. Improvement of personnel policy and human resource development;

3. Ensuring of safety in the workplace and reduction of environmental risks;

4. Assistance in the development of sports and tourism cluster.

9

Consolidated financial and economic indicators of JSC “KazMunayGas – RM” according to the

results of 2014

Workforce productivity

JSC ―KazMunayGas – RM‖

Name Unit of

measurement

2014

Workforce productivity, consolidated tons/persons 1,32

Workforce productivity, oils products sales

tons/persons 0,24

Workforce productivity, oil refining tons/persons 1,11

Refining volume thouands of tons 12 690

Sales volume thouands of tons 2900

Numbers persons 11 482

EBITDA margin

EBITDA margin % 17

ROACE

ROACE % 2,5

Refinery yield % 70,48

Atyrau Refinery 62,77

POCR 76,27

PKOP 74,19

Local content share in the total volume of goods purchase

% 65

Local content share in the works and services

% 62

10

Key events in 2014

JANUARY

The EPC contract was signed for implementation of first Phase of "Reconstruction and

modernization of the Shymkent Oil Refinery" project.

FEBRUARY

The reconstruction project of coke calcination unit in "Atyrau Refinery" LLP was completed. The

facility was put into operation under the Act of the State Commission No. 238 dated 10.16.2014. There

were achieved operation figures of coke calcination unit at design capacity of 23 tons per hour with a

guaranteed obtaining of KP-1 calcined coke and at capacity of 16-18 tons per hour with a guaranteed

obtaining of KP-2 calcined coke.

MARCH

The Resolution of Government of Republic of Kazakhstan No. 232 dated March 12, 2014

established quotas for employment of foreign nationals within "Reconstruction and modernization of

Atyrau Refinery" priority project for the 2014;

KMG-RM acquired 97.8% of shares of «Kazakhstan Petrochemical Industries» JSC;

The Decision of Government of Republic of Kazakhstan was signed on assigning KMG-RM as

company-operator for counter-delivery of oil to Russian Federation;

A power of attorney of Ministry of Oil of Republic of Kazakhstan was signed for the purpose of

ensuring the implementation of previously-received volumes of oil royalties.

APRIL

The authorized capital of the KMG-RM was increased to 4,774,400 common shares for a total

amount of 7.4 bln. tenges;

The amendments to separated and consolidated business plans of KMG-RM for the 2014-2018

were approved taking into account the assignments of the President of Kazakhstan in terms of

increasing salary of production personnel for 10% and changing of the budget dollar rate from 153 to

185 tenges.

MAY

The Resolution of Government of Republic of Kazakhstan No. 499 dated May 16, 2014

established quotas for employment of foreign nationals within "Reconstruction and modernization of

Shymkent Oil Refinery" project for the 2014;

The Program on "Atyrau Refinery" LLP, "Pavlodar Oil Chemistry Refinery" LLP Business

Process Reengineering for the period of 2014-2017 was approved;

Memorandum of financing of "Modernization and reconstruction of Shymkent Oil Refinery"

project up to one billion US Dollars was signed between the Export-Import Bank of China and "Bank

for Development of Kazakhstan" JSC;

«Eurasian Munai Impex» LLP was renamed to «KazMunayGas-Aero" LLP.

JULY

A positive conclusion of "Gosekspertisa" RSE was obtained for the DED of main stage of

11

"Reconstruction and Modernization of the Shymkent Oil Refinery" project;

The Board of Directors of "KazMunayGas - RM» JSC approved the development strategy of

"KazMunayGas - RM" JSC for the period of 2014 - 2022.

AUGUST

Project targets of Aktau asphalt plant «JV «CASPI BITUM» LLP (daily load 3 thous. tenges)

were achieved;

A credit contract No. 307-2014 dated 01/08/2014 in amount of 400 mln. US Dollars was signed

between "KazMunayGas-RM" JSC and "Sberbank of Russia" JSC for the purposes of financing of

"Modernization and reconstruction of Shymkent Oil Refinery" project;

A positive conclusion of "Gosekspertisa" RSE for updating of feasibility study was obtained

within the project "Modernization of POCR";

KMG-RM acquired 30% of "Industrial Rubber Goods-Atyrau Refinery" share from «Petroleum»

LLP.

DECEMBER

Credit line agreement No. 41-CM-S/05-01 dated 12/25/2014 in the amount of 51 465 mln. tenges

was signed for the purposes of financing of "Modernization of the Pavlodar Oil Chemistry Refinery"

project;

Volume processing of PKOP for 2014 (5,065 thous. tons) is a record for the last 22 years (the last

time in 1992 the volume processing exceeded the mark of 5 mln. tons and amounted to 6.48 mln.

tons);

Volume processing of "Atyrau Refinery" LLP for 2014 (4.920 thous. tons) since 1945 is the

second in the history of the plant (volume processing exceeded only once in 1976 - 4963 th. tons).

In December 25, 2014, a ceremony of pre-commissioning activities on the catalytic reforming unit

of CPA was held within the national teleconference "New Industrialization" with the participation of

the President of Kazakhstan Nazarbayev N.A.;

KMG-RM (KMG-O, KMG-Aero) are identified a sole operator for supply of petroleum products

to the Armed Forces of the Republic of Kazakhstan, the Border Guard Service of National Security

Committee of the Republic of Kazakhstan, the National Guard of the Republic of Kazakhstan,

authorized body in the field of civil protection, the authorized body in the field of state material

reserve according to Resolution of Government of Republic of Kazakhstan "Concerning assignment of

sole operator for supply of oil products" No. 1304 dated December 12, 2014.

12

Capital structure of JSC “KazMunayGas – RM” as of December 31, 2014

Level I Level II Level III Level IV

KMG-RM

100%

»

»

-

-

(100%)

-

33%

17%

Valsera Holdings B.V. (50%) TH KMG N.V. (100 %)

«KMG - Onіmderі» LLP (100%)

«ҚazMұnayGaz-Aero»

LLP(100%)

«Atyrau Oil Refinery»

LLP(99,53%)

TH KMG AG LUGANO (100%)

KMG PKOP Finance B.V. (100%)

«PCOP» LLP (99,43%)

«Industrial Rubber Products-Atyrau Oil Refinery» LLP(30%)

«ПХСНГ» LLP(50%)

«KPI» JSC (97,80058%)

«Kaskor Transservis» JSC

(12,87%)

«Pavlodar Petroleum Chemistry

Plant » LLP(100%)

Corporate university «Samruk

Kazyna» (9,99%)

«Caspi Bitum» LLP(50%)

13

KEY RESULTS OF FINANCIAL AND OPERATING ACTIVITIES

Financial results for 2012-2014

Oil refining

Consolidated volume processingof raw materials in the three oil refineries of the Republic of

Kazakhstan is amounted to 12,378.3 thous. tons.

Indicators of hydrocarbon processing on the basis of the last three years and plans for 2015

Production

efficiencies

Unit of

measurement

2012

(fact)

2013

(fact)

2014

(fact)

2015

(plan)

Oil refining, total thous. tons 11 837,5 11 868,0 12 378,3 12 000

"Atyrau Refinery" LLP thous. tons 4 422,8 4 429,5 4 920,0 4 866

"POCR" LLP thous. tons 5 037,5 5 010,0 4 925,7 4 809

"PKOP" LLP thous. tons

(taking into account

the 50% of KMG-RM share)

2 377,1 2 428,5 2 532,6 2 325

Refinery yield % 68,7 69,7 70,48 68

"Atyrau Refinery" LLP % 57,6 59,80 62,77 56

"POCR" LLP % 72,46 74,18 76,27 79

"PKOP" LLP % 76,00 74,44 74,19 72

In all respects, the overfulfillment of main targets took place: raw material processing and the

production of socially significant oil products, including the actual fulfillment of raw material volume

processingon three refineries is amounted to 12,378 thousand tons. There is an increase in volume

processingfor 510 thous. tons in comparison with 2013 year.

There is a slight decline in production of ТС-1 jet fuel, in comparison with the year 2013 (347 tons). It

is due to an increase of PKOP share in total output of jet fuel.

* - Someofthefiguresabovedonotcorrespondtothefiguresfromtheannual consolidatedfinancialrecordsasofDecember 31, 2013,

anddisplaytheadjustmentsmade. Foradditionalinformation, pleasefindEnclosure 6 attached.

Indicators

(mln. tenges)

2012 2013* 2014

Consolidated financial

statements


statements


statements

Income, total

including: 1 299 696 578 334 436 100

Income from sales of

products and services 1 294 293 572 713 416 923

Expenses, total

including: 1 285 389 554 187 416 639

Cost of sold products and

rendered services 1 162 939 461 551 312 061

The corporate income tax

expenses (including sales

tax)

5 126 14 943 4 902

Net income after

withholding of minority

share

14 269 24 05 19 91

14

Competitive benchmarking of company's activity over the past period

As companies of reference group, the following companies are selected:

Unipetrol – a leading company in the Czech Republic in the sector of oil refining, petro-chemistry and oil products marketing;

NesteOil – a leading Finnic company in the field of refining and marketing of oil products;

PKNOrlen – the largest Polish company, dominant in the sector of oil refining and marketing of oil products.

At the end of 2014 KMG-RM takes the following positions in the comparative analysis with leading companies.

Financial indicators:

ROACE, %** Net income, mln. $ income1, mln. $ EBITDA margin, % Margin of net income, %

2012 2013 2014 2012 2013 2014 2012 2013 2014 2012 2013 2014 2012 2013 2014

Refinery and marketing

Unipetrol -10,87% -2,44% 2,40% -179 -53 -23 5 632 3 826 5 104 0,63% 1,53% 1,00% -3,0% -1,4% 0,4%

KMG R&M 3,58% 4,95% 2,48% 95 182 103 8 542 6 482 2 254 3,32% 7,58% 17,0% 1,1% 2,8% 5,0%

Neste Oil 4,54% 11,80% 10,10% 210 697 80 23 571 23 224 19 964 3,64% 5,47% 3,10% 0,9% 3,0% 0,3%

PKN Orlen 7,62% 0,77% -0,20% 701 21 -1 582 38 817 27 097 29 005 4,88% 2,20% -2,55% 1,8% 0,1% -5,5%

Mean value 3,25% 2,64% 3,95% 191 70 -355 16 267 13 235 14 082 3,48% 3,34% 4,56% 0,7% 0,3% 0,0%

Median value 4,54% 1,54% 2,95% 107 9 29 12 783 12 345 12 534 3,44% 2,20% 2,05% 0,9% 0,1% 0,4%

1Income from sales and rendered services

15

Operating capabilities:

Oilrefinery, mln. tons/year2

Oilproductsrealization (wholesale+retail trade) mln.

tons/year

2012 2013 2014 2012 2013 2014

Refinery and marketing

Unipetrol 3,93 3,61 5,13 3,28 3,15 4,27

KMG R&M 11,84 11,87 12,69 9,15 10,35 3,56

Neste Oil 11,51 12,02 13,23 16,03 15,73 13,54

PKN Orlen 27,94 28,13 27,28 35,29 35,89 35,74

Average value 11,61 11,69 14,58 14,26 12,93 14,28

Median value 11,51 11,87 12,96 10,91 10,35 8,91

ROACEisoneofoperatingcapabilityindicators. The table shows that the value was lower than the

average value among the companies compared, which indicates ineffective funds and resources

management.

Therewith, thenetprofit, income, EBITDAmargin,netincomemarginvalueswerehigherthantheaverage

selection value.

ThereasonsofthedifferencesinvaluesbetweenKMG-

RMandthereferencecompaniesareduetothedifferencesinthemanagementsystem, organizationstructure,

departmentsandresponsibilities, logisticsanddistribution system, techniques and procedures.

Inordertoimprovetheindexestothelevelofthereferencecompanies,

anactionplanisbeingdevelopedintermsoilrefineryplantmodernizationandKMG-

RMcompanygroupinitiativesimplementationwithinthetransformationProgramof «Samruk-Kazyna» JSC

company group.

2KMG-RM: consolidated index, which includes 50% of PCOP throughput performance volume and 50% of Caspi Bitum

throughput performance volume.

16

Investment projects for development of Oil refinery

In accordance with the approved Government of RK Resolution No. 1072 dated 18.10.2010, the

program for development of oil and gas sector in Kazakhstan for 2010-2014, implements investment

projects of development and modernization at all three refineries of Kazakhstan.

Modernization of refineries will replace obsolete and worn-out equipment, improve the quality of oil

products that meet Euro-4 and Euro-5 standards, increase production of light oil products to 77% with

increasing refinery yield to 87-90%, reduce harmful effects on the environment. As a result of

reconstruction and modernization of oil processing, the capacity will amount to 18.5 mln. tons per year,

there will be basic products and diesel fuel will comply with Euro-5 environmental quality standards.

«Atyrau Refinery» LLP (Atyrau Refinery)

Atyrau oil Refinery plant was put into operation in 1945.

The design capacity of oil processing is 4,906 thous. tons.

KMG-RM holds 99.53% equity interest in theATYRAU REFINERY.

Production of basic of oil products in 2014

Name

Atyrau Refinery

Unit of

measurement 2012 2013 2014

Oil refining tons 4 422 773 4 429 517 4 920 005

Motor gasoline tons 506 006 505 197 613 855

Diesel fuel tons 1 217 795 1 221 659 1 344 089

Jet kerosene TS-1 tons 56 351 38 230 22 526

Furnace oil tons 143 348 124 395 165 967

Fuel oil tons 1 542 892 1 512 016 1 510 269

Vacuum gasoil tons 606 492 652 492 778 604

Coke tons 74 992 95 119 137 356

Liquefied gas tons 14 255 19 638 28 415

Sulphur tons 1 361 1 345 2 449

In 2014, there were processed more than 4,920 thous. tons of crude oil when processing plan provided

for by production program is 4,920 thous. tons.

Implementation of oil refining plan was 100%.

In 2014, 613 thous. tons actually produced, when the plan is 603.2 thous. tons. Implementation of the

plan was 101%.

Concerning production of diesel fuel under adjusted plan of 1,285.8 thous. tons, 1 344.1 thous. tons. is

actually produced. Over-fulfillment of the plan is 1.18%.

Implementation of the plans on oil refining and production of all socially significant oil products

except fuel oil.

In 2014, Refinery yield was 62.77%. Achieving refinery yield is for 2.33% above the plan.

1. "The construction of complex for production of aromatics at Atyrau Refinery" (CPA) -

Petro-chemistry This project involves construction of the Technology Package «Paramax BTX», being licensed by

French company «Axens» (xylol prefractionation section xylol isomerization section, toluol transalkylation

section, raffinate separation section), and construction of the catalytic reforming unit with continuous

catalyst regeneration and benzene extraction unit.

17

The project is implemented under the State program for accelerated industrial-innovative development of

Kazakhstan for 2010-2014., Approved by Presidential Decree No. 958 dated 19.03.2010

As part of the CPA production of 133 thous. tons of benzene and 496 thous. tons of paraxylene per year is

planned, complex installation can also produce high-octane components of motor gasoline.

Goals of the project:

• Increase plant's balanced capacity to 5 mln. tons per year;

• Production of motor fuels that meet K3environmental requirements;

• Production of products with high added value - benzol and paraxylol.

Implementation period: 2010 - 2015

Project cost: $1,098 mln.

To implement the project, borrowed funds from "Kazakhstan Development Bank" JSC was raised in

the amount of $ 1,063.7 mln., including subsidized credit line from Export-Import Bank of China for $ 884

mln.

Project participants: NC "KMG", ATYRAU REFINERY, «Sinopec Engineering Group» (China),

OGCC JSC, "KazStroyService" JSC (Kazakhstan).

Completed activities:

- Feasibility study was developed by "EC" KazGiproNefteTrans" LLP. There was positive

conclusion of "Gosekspertiza"RSE No. 2-12/08 dated January 18, 2008

- «Omskneftehimproekt» JSC developed design estimate documentation. There was a positive

conclusion of RSE "Gosekspertiza" No. 01-393/09 dated August 20, 2009

- EPC contract was signed on October 29, 2009 with Chinese company «SINOPEC Engineering

Group» (General contractor). Subcontractor - Kazakhstan company NSCC «KazStroyService" JSC.

Current condition

As part of EPC contract, construction and assembly operations was completed on the catalytic

reforming unit (the first start-up complex).

In December 25, 2014 during nationwide teleconference "New industrialization of Kazakhstan" the

Head of Government launched pre-commissioning activities of complex for the production of aromatics at

the base of Atyrau Refinery.

The planned date of CPA commissioning - July 2015.

2. "Construction of advanced oil processing center at Atyrau Refinery" (AOPC)

AOPC complex provides construction of 13 individual processing units. The main one is a catalyst

cracker designed for conversion of atmospheric distillation residues, heavy gas oil, vacuum gas oil and

heavy gas oil of delayed coking unit into the more valuable oil products such as liquefied petroleum gas,

gasoline and light gas oil of cracking distillation. Processing of low-value residual oil will allow Atyrau

Refinery to increase production of high-octane gasoline, jet and diesel fuel.

The project is implemented in the framework of the State Program of Accelerated Industrial and

Innovative Development of Kazakhstan for 2010-2014 approved by Presidential Decree No. 958 dated

19.03.2010.

Goal of the project:

- Improving of motor fuels quality meeting the requirements of emission standard K-4 and K-5;

- Increasing efficiency of plant for processing crude oil to 5.5 mln. tons per year;

- Increasing capacity of secondary processes and the oil-refining yield.

Implementation period: 2010 – 2016 годы

Project cost: $ 2,023 mln.

18

Funding:

To implement the project, borrowed funds was raised from "Kazakhstan Development Bank" JSC in

the amount of $ 1,818.3 mln., Export-Import Bank of China, JBIC (Japan), "NC" KazMunaiGas" JSC.

Participants: NC "KMG", Atyrau Refinery, EPC contractor - Consortium «Sinopec Engineering

Group» (China)/«Marubeni Corporation» (Japan)/"KazStroyService" (Kazakhstan).


- Feasibility study was developed by "EC" KazGiproNefteTrans" LLP. There is positive conclusion of

RSE "Gosekspertiza" No. 2-488/08 dated 26.09.2008

- «Omskneftehimproekt» JSC developed design estimate documentation. There is positive conclusion

on technical part of RSE "Gosekspertiza" No. 01-565/11 dated 23.12.2011. There is positive

conclusion on budget part No. 01-216/12 dated 23.05.2012.

- EPC contract was signed on December 29, 2011 with a consortium of contractors «SINOPEC

Engineering Group» (China) - «Marubeni Corporation» (Japan) - JSC NSCC «KazStroyService"

(Kazakhstan).

Current condition

EPC contract with consortium «Sinopec Engineering Group» (China)/«Marubeni Corporation»

(Japan)/"KazStroyService" (Kazakhstan) was signed on December 12, 2011. Working documentation is

under development, construction works are performing. The works on placing orders for manufacturing

and delivery of large-sized equipment with long lead time are in progress.

«Pavlodar Oil Chemistry Refinery» LLP (POCR)

Pavlodar Oil Chemistry Refinery is one of the largest and most technologically advanced oil refineries

in Kazakhstan.

The plant is technically oriented to process West Siberian oil.

KMG-RM holds 100%equity interest in the Pavlodar Oil Chemistry Refinery.

Production of basic oil products in 2012–2014

Name

Pavlodar Oil Chemistry Refinery

Unit of



Motor gasoline tons 1 331 832 1 117 045 1 259 249

Diesel fuel tons 1 513 840 1 472 749 1 508 711

Jet kerosene TS-1 tons 99 557 133 117 124 828

Furnace oil tons 0 0 0

Fuel oil tons 810 183 762 763 668 283


Coke tons 146 573 146 439 151 756

Liquefied gas tons 244 355 214 883 239 360

Sulphur tons 23 541 22 692 25 419

Raw material for technical carbon tons 0 0 0

Bitumen tons 186 265 218 523 243 581

In 2014, more than 4,925 thous. tons of crude oil was refined, while the planned processing volume

provided in production program was 5.0 million tons.

Fulfillment of the plan of oil refining was 95.58%.

In 2013, after having the revised plan of gasoline production of 1,317 thous. tons, the actual produced

volume was 1,259 thous. tons. Completion of the plan was 97.31%.

19

After having the revised plan of diesel fuel production 1,579 thous. tons, the actual produced volume

was 1,508 thous. tons. Completion of the plan was 95.54%.

In 2014, refinery yield totaled 76.27%. Non-achievement of refinery yield is 0.43 % below the plan.

Investment project “Modernization of Pavlodar Oil Chemistry Refinery”

The project is implemented within the framework of the State Program of Accelerated Industrial and

Innovative Development of the Republic of Kazakhstan for 2010–2014 (SPAIID), approved by the Decree

of the President No. 958 as of March 19, 2010.

Goals:

- Increase plant efficiency up to 7.0 million tons per year;

- Ensuring of production of motor fuels meeting the requirements of emission standard K-4 and

K-5;

- Ensuring of the possibility of processing of Kazakhstani oil in the volume of 5.2 million tons

per year.

Implementation Period: 2011 – 2016

Project cost: $1,218 mln.

In order to implement the project, borrowed funds of $600 mln. weregranted byNC «KazMunayGas»

JSC(short-term loan)"Kazakhstan Development Bank" JSC(long-term loan).

The project is carried out taking into account the division into three launching complex:

Launching complex 1 - provides production of high-octane component of gasoline.

Launching complex 2 - provides achievement capacity of 6.0 mln. tons per year of West Siberian oil

processing, production of gasoline and diesel fuel (summer) according to the requirements of emission

standards K-4.

Launching complex 3 - provides increasing design capacity up to 7.0 mln. tons per year of West

Siberian oil processing, enablesthe possibility of processing of Kazakhstani oil in the volume of 5.2 million

tons per year, production of gasoline according to requirements of emission standards K-4, production of

diesel (summer and winter) according to requirements of emission standards K-5.

In July 30, 2013, a contract was signed for development of working documentation, procurement and

supply of equipment, performing of construction and installation works (EPC contract) with the Rominserv

S.R.L company.


- Adjustment of feasibility study was made, conclusion by RSE "Gosekspertiza" dated 29.08.2014 was

obtained;

- Work concerning adoption of DED to rules and standards of Republic of Kazakhstan with further

transfer to the RSE "Gosekspertiza" is in progress;

- Working documentation (drawings developed - 45%) is under development;

- Placed an order for 100% of the isomerization equipment and splitter naphtha (PK1);

- Two segments of K-502 columns(splitter naphtha) were installed;

- Work on construction of temporary buildings, working piles, sites for columns, pouring of concrete

under large-sized columns PC1.

“Petrokazakhstan Oil Products” LLP (PKOP)

«PetroKazakhstan Oil Products» LLP (PKOP LLP) Refinery commissioned in 1985 and is one of the

three major refineries in Kazakhstan with a design capacity of 5.2 million tons/year.

The management of PKOP LLP is carried out on a parity basis by National Company KazMunayGas

represented by JSC KazMunayGas - Refining and Marketing, and China National Petroleum Corporation

CNPC.

Raw materials processed are mostly Kazakh oil from the Kumkol and Kenkiyak fields and West

Siberian oil.

20

In 1994, the company was privatized. In 2000, the Canadian company acquired the plant. On October

26, 2005, PKOP LLP wasacquired by CNPC through its subsidiary entity. In 2007, KazMunayGas became

the indirect holder of 50% of shares of the PKOP, which provides ownership on a parity basis and

management of the plant as of today.

Production of basic oil products in 2014(excluding a 50% share of KMG-RM)

Name PKOP

Unit of

measurement 2012

2013 2014

tons 4 754 231 4 857 010 5 065 239


Motor gasoline tons 1 336 435 1 375 583 1 346 166

Diesel fuel tons 275 002 231 332 278 624

Jet kerosene TS-1 tons 902 477 968 231 1 013 213

Fuel oil tons 797 504 826 541 883 816


In 2014, the plant processed 5,065 thous. tons of crude oil, while the planned processing volume

provided in production program was 4,969 thous. tons.

Fulfillment of the plan of oil refining was 101%.

In 2014, after having the revised plan of gasoline production of 1 054 thous. tons, the actual produced

volume was 1 126 thous. tons. Completion of the plan was 106%.

After having the revised plan of diesel fuel production 1,312 thous. tons, the actual produced volume

was 1,346thous. tons. Completion of the plan was 102%.

In 2014, refinery yield totaled 74.19%. Achievement of refinery yield was 0.43 % above the planned

depth.

Project “Modernization and Reconstruction of the Shymkent Refinery”

The project is implemented within the framework of the State Program of Accelerated Industrial and

Innovative Development of the Republic of Kazakhstan for 2010–2014 (SPAIID), approved by the Decree

of the President No. 958 as of March 19, 2010

As part of the reconstruction and modernization of the plant there are planned to restore of design

capacity up to 6 mln. tons per year, improve the quality of motor fuels to requirements of emission

standards K-4 and K-5.

The project is divided into two stages:

Stage 1 is aimed to provide complying of oil products with emission standards K-4, K-5, and includes

the following installations: isomerization, diesel fuel hydrotreatment and sulfur production with capacity of

4 thous. tons per year.

Stage 2 is aimed to increase plant's capacity up to 6 mln. tons per year and refinery yield up to 90%.

This stage includes the following installations: catalyst cracker RFCC, hydrotreatment of gasoline of

catalytic cracking Prime G +, demercaptanization of unsaturated and saturated LPG, sulfur production (2 x

15 thous. tons per year), the installation of hydrogen purification (PSA 1, PSA 2).


On January 30, 2014 the EPC - contract was signed for implementation of Stage 1 with SRESS

Company (a subsidiary of CNPC);

DED for Stage 2 was developed. Conclusion of RSE "Goserspertiza" № 01-0359/14 dated 02.07.2014

wasobtained.

Project cost: $ 1.829 bln.

To implement the project borrowed funds were raised from the participiants of PKOP (JSC

"KazMunayGas-RM" and CNPC E&D Holding Cooperatief UA) totaling $800 mln.

Current condition

21

Isomerization installation:

Orders for 81 of the 140 units of long lead time equipment were placed;

Construction site preparation was completed;

Foundations and pre-assembly of segment equipment, the placement of orders for the manufacture and

supply of equipment are carrying out.

Installation of sulfur production: Construction and installation works are completed, the act of the working committee is signed;

On March and April 2015 it is planned an optimization schemes of reactors strapping, with further run

period.

Installation of sulfur production: Mechanical works are completed pre-commissioning activities are carried out.

Stage 2:

Development of DED id completed;

On July 2, 2014, a positive conclusion of Gosekspertiza for DED was obtained.

Production of road bitumen at Aktau Plastics Plant

Bitumen plant was built in accordance with State Program of Accelerated Industrial and Innovative

Development of the Republic of Kazakhstan for 2010–2014 to meet needs in quality road bitumen for road

construction of Republic of Kazakhstan.

"JV "CASPI BITUM" LLP (hereinafter - CASPI BITUM) is established in 2009. The founders are

«Kazakhstan Petrochemical Industries» JSC - 50% and «CITIC Kazakhstan» LLP - 50%.

The volume of raw material processing and production of marketable oil products in 2014 of

«JV «CASPI BITUM» LLP

Plant for road bitumen production was put into operation in 2013. The design capacity of oil refineries

is 1.0 mln. tons per year.

JSC "KazMunaiGas - Processing and Marketing" holds 50% of stake in CaspiBitum (via «Kazakhstan

Petrochemical Industries» JSC).

Name CASPI BITUM

Unit of

measurement 2014 (plan) 2014 (fact)

The volume of hydrocarbon processing thous. tons 623 624

Production of oil products in section thous. tons 610 614

Road bitumen thous. tons 153 153

Construction bitumen 60/90 thous. tons 49




Mixture of oil products thous. tons 456 461

Heavy distillate liquid oil thous. tons 220


On December 12, 2013 the act of the State Acceptance Commission was signed on putting of bitumen

plant in to operation;

On December 20, 2013 an official ceremony of starting bitumen plant was held with participation of

President of Kazakhstan Nursultan Nazarbayev within the "Industrialization Map of Kazakhstan"

teleconference;

On December 2013 the first party of bitumen was received;

On August 2014 raw material processing capacity reached 100% (daily load - 3,000 tons).

To implement the project, borrowed funds were raised totaling $ 290 mln. due to:

raised borrowed funds from Chinese financial institutions;

22

proportional contribution of «JV «CASPI BITUM» LLP Participants of the Partnership to the equity

capital.

The design capacity of the plant for production per year:

- Bitumen for roads brands BND 70/100, BND 100/130 - 400 000 tenge;

- Polymer-bitumen binders brands PBB 60, PBB 90 - 120 000 tenge.

Sales of oil products

The share of KMG - RM on the domestic retail market of oil products reached 16.7%. Petrol filling

stations network consists of 320 PFS, NGVRCS and PFS-NGVRCS, 43% of which are located in the

cities, and 57%, respectively, on the roads of Kazakhstan.

JSC KazMunayGas maintains activity of its own network of PFS through its subsidiary

«KazMunayGas-Onimderi» JSC.

Indicators Unit of


The volume of oil

productssales, including thous.tons 1 138 1 281 1 521

Wholesale trade thous.tons 60 74 58

RON-95 thous.tons - 0,2 0,06

RON-92 thous.tons 3 71 2


RON-98 - - 0,05

Diesel fuel thous.tons 15 1 53

CIS thous.tons 40 - -

Retails trade thous.tons 1 078 1 207 1 463

RON-98 thous.tons 0,1 0,1 0,9




Diesel fuel thous.tons 415 518 735

CIS thous.tons 21 16 20

The following results were achieved within implementation of actions for the retail chain

development:

- Overhaul of 228 PFS (disbursement period 2011– 2013) was completed, under which works on

replacing exterior finish (rebranding), interior finishing works were completed, sanitary facilities were

repaired, systems of hot and cold water supply, and sewerage were connected, underfloor heating was

mounted in cashier’s desk areas, heating equipment at PFS was replaced, works on landscaping and

planting were performed, and in some PFS process pipelines and storage tanks were replaced. It should be

noted that, as a result of this work replanning of control room buildings was carried out, working

conditions for the PFS’ staff, additional service for clients were created, a range of services was extended.

Our PFS have become more attractive, recognizable and marked in the territory of the CIS.

- In 2014, 13 PFS in Northern-Kazakhstan Oblast and 8 gasoline trucks were purchased within

framework of the investment project ―Purchase of 40 PFS and 18 gasoline trucks‖.

Delivery of diesel fuel to agricultural producers

In 2014, during spring and autumn field works, the Group of companies JSC KazMunayGas - RM

ensured timely shipping of diesel fuel manufactured by Atyrau Refinery LLP to agricultural producers

within the framework of the memorandum ―On agreement between the governmental authorities and the

major holders of oil and oil products resources and manufacturers of petrochemical products for the

23

provision of agricultural producers of the Republic of Kazakhstan with diesel fuel‖ and according to the

Conditional schedule of region assignment to the oil refineries, approved by the Ministry of Oil and Gas of

the Republic of Kazakhstan.

Sowing campaign

During the sowing season of 2014, the ―KazMunayGas - RM‖ JSC supplied 67.00 thous. tons out of

66.67 thous. tons of ordered diesel fuel to the assigned regions. All purchase requests of the customers

were fulfilled, against payment made in accordance with the capacity of rail tank cars, which amounted to

99.5%.

№ i/s Region

Distributed

thous. tons in

2014

Shipped

thous. tons

in 2014

% of fulfillment

by volume of

distribution

1 Akmola 30 000 29951 99,84

2 Kostanay 37 000 36723 99,25

TOTAL: 67 000 66 674 99,51

Harvest campaign

At the time of harvesting operations in 2014, the the ―KazMunayGas - RM‖ JSC was instructed

to supply diesel fuel to the regions in the amount of 72.00 thous. tons, which the ―KazMunayGas

shipped 70.41 thous. tons of diesel fuel. All purchase requests of the customers were fulfilled in

accordance with their payments, which amounted to 97.80%.

№ i/s Region

Distributed

thous. tons in

2014

Shipped

thous. tons

in 2014

% of fulfillment

by volume of

distribution

1 Akmola 35 000 34 053 97,29

2 Kostanay 37 000 36 361 98,27

TOTAL: 72 000 70 414 97,80

Supply of residual fuel oil for heating

No. i/s Region

Distributed

thous. tons in

2014

Shipped

thous. tons

in 2014

% of fulfillment

by volume of

distribution

1 North Kazakhstan 1 800 1 774 98,5

2 Almaty City 17 200 0 0,00

3 Kyzylorda 42 800 20 070 46,89

4 Atyrau 4 000 3 989 99,73

5 Kostanay 20 000 18 845 94,23

TOTAL: 85 800 44 679 52,07

«KazMunayGas - Aero» LLP (KMG-Aero)

Within the framework of strengthening of "KazMunayGas" companies group's positions in the fuel

market of the Republic of Kazakhstan, as well as development of alternative distribution scheme of jet fuel,

the Board of Directors of JSC "KazMunayGas - RM" decided to create KMG - Aero.

Indicators Unit of

measurement 2014 (fact)

24

The volume of jet fuel sales thous.tons 7,01

Income, total thous.tons 1 072 852

Expenses, total thous.tons 1 302 411

Net income/(losses) thous.tons - 229 559

Key events in KMG-Aero in 2014:

- Entering aircraft refueling market in Republic of Kazakhstan, establishment of working

relationships and the beginning of jet fuel sales through the airports of Almaty, Astana, Atyrau, Aktobe and

Uralsk;

- Establishment of business relationships and start of providing Bek Air and SCAT airline companies

with jet fuel;

- Signing of the Memorandum on strategic partnership with «Airport Management Group»

management company (manages 6 airports in Republic of Kazakhstan), within the framework of which a

jet fuel supply of airports is provided;

- Signing of Agreement on cooperation with the largest Russian resource holder "RN-Aero", within

the framework of which a jet fuel supply of KMG-Aero is provided.

Export and transportation Oil products export

Since November, 2013, KMG-RM sells heavy oil products for export from the Atyrau Refinery.

During period from January to December 2014, the company sold heavy oil products for export in total

974.48 thous. tons, including:

Name

Unit of

measure

ment

KMG-RM

tons 2013 2014

Masout 25 820 536 471

VGO 50 509 314 340

Furnace oil - 67 020

Sulfur - 1 100

Coke 11 727 55 546

Oil export

Within the framework of Agreement between Government of Republic of Kazakhstan and

Government of Russian Federation on trade and economic cooperation in the supply of oil and oil products

to Republic of Kazakhstan dated December 9, 2010 (hereinafter - Agreement) and by methodology of

counter oil supplies to Russian Federation for imported oil products from Russian Federation to Republic

of Kazakhstan, which is an integral part of Agreement and in accordance with the decision of the

Government of Republic of Kazakhstan dated March 4, 2014 №176 «On some issues of oil and oil

products delivery" (hereinafter - Decision), the Company has been determined as operator on counter oil

supplies to Russian Federation. In order to execute Resolution, in 2014 the Company sold 755,920 tons of

crude oil of Kazakhstan oil producing organization to Russian companies.

From January to December 2014, JSC KazMunayGas – Refining and Marketing sold for export dark

oil products in the total volume of 974.48 thous tons.

Transportation and logistics

KMG – RM that performs functions of the transport-forwarding company under a contract of carriage

of goods with JSC NC Kazakhstan Temir Zholy, carries out the delivery of oil products from refineries of

the RoK by railway transport across the territory of the RoK, in order to provide timely and uninterrupted

supply of oil products to own petrol filling stations, domestic agricultural producers during sowing and

harvesting campaigns and socially significant facilities during the heating season.

Requests for shipping diesel fuel and gasoline from major oil refineries to provide internal market with

oil products using the fleet of «KazTemirTrans» JSC were completed in full.

25

Alongside with that, KMG – RM controls and monitors shipments of oil products from the major oil

refineries of Kazakhstan, including:

- indicators of oil processing by holders of resources, yield of oil products, remaining balance, plans

of rail transportations, actual shipments by areas and types of oil products;

- makes calculations of railway tariffs, as well as other transportation charges required for taking a

decision on supply of oil/oil products by rail;

- determines rational ways for delivery and optimizes transport routes based on the efficient use of

rolling stock.

SUSTAINABLE DEVELOPMENT

KMG – RM is aware of the social responsibility of business and makes every effort to conduct

business on the basis of ethics and contribution to economic development, while improving the quality of

life of its employees and their families, and society as a whole.

The Company seeks to provide sustainable and successful development of its business, focusing on its

social component. These main areas include implementation of social programs for personnel, sponsorship

and charity, conduction of environmental and educational activities.

At the corporate website of the company, "Sustainable Development» section

(http://www.kmgrm.kz/ru/social-projects) was created, which reflects the information on social and

charitable projects on environment, labor protection and industrial safety. In addition, the section includes

subsections on themes of Kazakhstan content, the development of human resources and innovation. The

code of corporate social responsibility placed separately.

Company in accordance with the internal documents is actively involved in providing social support to

its employees and pensioners, allocating statutory funds, conducts environmental activities, provide

sponsor and charity support.

Since 2014, KMG-RM implements housing program under Regulations of financing organization of

aquired house by employee of «KazMunayGas-RM» JSC, approved by the Board of Directors of KMG-

RM (Minutes No. 11/2014 under 22.07.2014).

KMG-RM supports introduced integrated management system (IMS).

On August 2014, TUV NORD certification body conducted an external supervisory audit of

KMG-RM IMS.

The purpose of external supervisory audit is to determine compliance of KMG-RM IMS with

international standards ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007, as well as continuous

improvement of its effectiveness.

In 2014, to improve IMS the following activities were carried out:

- Certification of Internal Auditors (training workshop);

- Internal audit of KMG-RM IMS;

- Monitoring of processes effectiveness;

- Evaluation of satisfaction of KMG-RM and its subsidiaries customers (survey);

- Measures on environmental and health protect;

- Analysis on the part of top management.

Personnel

One of the fundamental values of the KMG - RM is an experienced and highly qualified staff. The

company aims to evaluate more objectively the professional contribution of each individual specialist and

provides equal opportunities for career development.

KMG – RM pays close attention to the development of human resources capacity. Thus, in order to

maintain and enhance the professional level of the employees of the Company during 2014, the company

organized training of operational and administrative personnel, skills development and advanced training

of specialists in the training center of «KazMunayGas» Group of companies –«Samruk-Kazyna» Corporate

26

University. Approaches to training and continuing education allow to manage effectively the knowledge of

the personnel and build human capacity able to ensure achievement of strategic objectives.

KMG-RM Group is one of the main employers in the entire territory of the Republic of Kazakhstan.

As of December 31, 2013, the total number of employees of the KMG-RM group was 11,482 people.

Efficiency coefficient of employees involved in KMG-RM group of companies for 2014 was 71%.

The level of turnover in the KMG-RM group of companies was 10%.

The employee incentive program of the KMG – RM Group of Companies combining material and

non-material incentives is aimed at attracting and retaining qualified personnel, increasing their interest in

results of the work.

KMG-RM performs regular monitoring of staff satisfaction. In the period from July 21 to July 25 of

current year, survey of KMG-RM and its subsidiaries employees was conducted in terms of satisfaction

with activity of structural divisions, focused on internal consumers.

Sponsorship and charity

Since its establishment, the KMG – RM Group of Companies actively participates in supporting

vulnerable population groups, assists in implementation of the state and industry social development

programs, nationwide events, provides sponsor support to organizations and workers of science, health care

service, culture, and sports.

Thesponsorshipandcharityissues of KMG-RM are set by Sponsorship and Charity support Regulations

of «KazMunayGas-RM» JSC and its subsidiaries and affiliates.

In 2013, «POCR» LLP provided non-governmental fund «Ertys-Pavlodar»Sports Club»(hockey club)

with sponsor support to effective club management, attract prospective players to the team, promotion of

KMG groups of companies in Republic of Kazakhstan and countries of the near abroad.

Results achieved – gold medal at the Open Hockey Championship of the Republic of Kazakhstan

among men’s teams of Premier League (season 2012–2013, season 2013–2014)

The Company also provided sponsor support for the Public association ―Boxing Federation of

Pavlodar region‖ for organization of the Regional Boxing Federation activities, maintenance of School of

Boxing in accordance with international best practices, promotion of KMG groups of companies in

Republic of Kazakhstan and countries of the near abroad.

The non-governmental fund Basketball Club ―Irtysh‖ also received sponsor support. The Clubreceived

a gold medal in the Basketball Championship of the Republic of Kazakhstan among women’s teams of the

National League (14-multiple champions).

Support for socially important projects – to the Humanitarian Foundation ―Degdar‖, Kazakhstan

Association of Oil and Gas and Energy Sector Organizations KAZENERGY.

Charity assistance – supporting pensioners, holding welfare assistance for pensioners. Atyrau Refinery

LLP provided support to the statutory activities of organizations of veterans, disabled persons, children’s

homes and centers, and other non-profit organizations in the social sphere and "Pavlodar Oil Chemistry

Refinery" LLP has supported organizations of the Council of Veterans activity (ex-employee of plant) and

material assistance to pensioners.

Total amount spent by the Group KMG - RM in 2014 for sponsorship and charity activities was

481,333 thous. tenge.

Environmental security

In 2014, there were no environmental accidents, excess emissions of pollutants at the production

facilities of the Company and its subsidiaries or related entities. At all production facilities, emissions into

the environment do not exceed the prescribed limits. There were no fines and environmental damage made.

1. Information about emissions of pollutants into the atmosphere during the reporting period

Subsidiaries Unit of

measurement

2012

(fact)

2013

(fact)

2014

(fact)

Atyrau Refinery tons 3 125 3 179 3 632

27

POCR tons 25 325 20 096 22 548

PKOP tons 17 590 17 520 17 300

KazMunayGas

Onimderi tons 1 512 1 483 1 658

TOTAL: tons 47 552 42 278 45 138

During 2014, on the manufacturing facility of «KazMunayGas Onimderi» LLP due to purchase of

petroleum-storage depot and PFS in NKO, SKO and EKO (rent), the pollutant emissions, waste-water

discharges and waste emplacement are increased. Accordingly, the amount of environmental charges are

increased.

2. Information on disposed production and consumption wastes


measurement

2012

(fact)

2013

(fact)

2014

(fact)

Atyrau Refinery tons 24 254 38,2 33 944

Pavlodar Oil

Chemistry Refinery tons 5 630 5015 4 725

PKOP tons 512,71 549,57 546,342

KazMunayGas

Onimderi tons 8 153 7545 7 592

TOTAL: tons 38 549,71 13 147,77 46 807,34

3. Information on disposal of wastewaters


measurement

2012

(fact)

2013

(fact)

2014

(fact)

Atyrau Refinery thous. m3 2668 1322 2 821

Pavlodar Oil

Chemistry Refinery thous. m

3 1636 928,6 1 681

PKOP thous. m3 1024 637,6 1 330,9

KazMunayGas

Onimderi thous. m

3 24 13,6 26

TOTAL: thous. m3

5 352 2 901,8 5 858,9

4. Information on the work on energy conservation being carried out

KMG-RM conducts systematic work on energy efficiency. Since the end of 2014, together with the

consultants, for the purpose of energy inspection designed for identifying of technically and economically

feasible potentials for improving energy efficiency of enterprises facilities, the activities on performing of

energy audits at all KMG-RM enterprises are started. Also,ISO 50001 energy management systemswere

introduced.

5. Information on activities carried out to reduce greenhouse gas emissions

For the period of 2014-2015, Atyray Refinery is certified for greenhouse gas emissions in amount of

1,521,709 tons. A confirmation (verification) of installation passport, program for reduction of greenhouse

gas emissions, action plan for the implementation of projects for reduction of greenhouse gas emissions of

newly commissioned plant facilities and report on greenhouse gas inventory for 2013 are performed.

Contractor: "Bureau Veritas Kazakhstan" LLP.

Pavlodar Oil Chemistry Refinery

28

Inventory of greenhouse gas emissions for 2013 was performed, a report was submitted to Ministry of

the Environment and Water Resources of Republic of Kazakhstan. The certificate on greenhouse gas

emissions for 2014-2015 was obtained.

PKOP

PKOP LLP carried out inventory of greenhouse gases for 2013, an Action plan to reduce greenhouse

gases emission, Program for reduction of greenhouse gases emission, as well as Greenhouse gases

monitoring plan were developed. Greenhouse gases inventory report was submitted to Ministry of the

Environment and Water Resources of Republic of Kazakhstan. Verification of PKOP materials was carried

out by Accredited Independent Entity "Kazakh environmental group" and received a positive conclusion.

Currently PKOP for 2014-2015 is certified for greenhouse gas emissions in amount of 1,273,653 tons. In

2014, greenhouse gas emissions amounted to 669,997 thous. tenge.

KasMunayGasOnimderi

During the reporting period, the Partnership conducted a procedure on inventory of greenhouse gas

emissions. In accordance with requirements of environmental legislation, inventory of greenhouse gas

emissions submitted to of low-carbon development Department of the Ministry of Environment of

Republic of Kazakhstan. In 2013, greenhouse gas emissions in CO2 equivalent is amounted to 19,946.6

tons.

Occupational safety and health

In 2014, expenditures connected with occupational health and safety were 1,573,502,757 tenges.


measurement

2012

(fact)

2013 (fact) 2014

(fact)

Atyrau Refinery tenges 429 285 000 156 929 400 778 627 144

Pavlodar Oil

Chemistry Refinery tenges 218 998 433 447 770 000 308 683 053

PKOP tenges 130 147 700 173 998 000 146 064 100

KazMunayGas

Onimderi tenges 287 652 300 336 147 080 340 128 460

In 2014, total number of employees completed training on safe working methods was 6,226

people.


measurement

2012

(fact)

2013

(fact)

2014

(fact)

Atyrau Refinery persons 347 1 127 599

Pavlodar Oil

Chemistry Refinery persons 2737 3 626 3 825

PKOP persons 3793 662 1 082

KazMunayGas

Onimderi persons 621 698 720

Accidents

In 2014, at the "Pavlodar Petrochemical Plant" LLP facility there was an accident on the P-102

furnace, shop №3 (25.10.2014) due to depressurization and process coil combustion.

As a result of conducting of investigation by a special commission of the Committee for State Control

of Emergency Situations and Industrial Safety of MES RK causes of combustion are established. The

guilty officials were brought to disciplinary responsibility, corrective actions were conducted, preventive

measures are developed and implemented

29

«KazMunayGaz - RM» JSC Managementstructure

(as of December, 31st, 2014)

Sole Shareholder of «KazMunayGaz» NC

JSC

Board of Directors

Management Board

Director General (Chairman of Management Board)

Corporate Center block

Industrial Block Transformation Block

Marketing Block Development Block

Budget and Tax Planning

Legal Support

Accounting Department Administrative

Department

Assets Management Human Resources

Information Technologies

Strategy, innovations and

local content

Risks Managements and Investments Control

Purchases Management and Contract Monitoring

Documentation Support

Refining

Oil refinery modernization

Projects Management

Oil products Marketing

Foreign trade transactions Coordination

Projects Management

Boards

30

CORPORATEGOVERNANCE

Thekeyprinciplesof «KazMunayGas» NCJSCCorporateGovernance (hereaftertheCG) aresetbytheCGCode,

approved by the resolution of «KazMunayGas» NCJSCPresident (ChairmanofManagementBoard) №201

underApril, 11th

, 2008 andcomplywiththebestacknowledgedstandardsofcorporategovernance.

Thecompanycorporatemanagementabidestheprinciples ofresponsibility, transparency, fairness,

professionalism and competence. KMG-RM considers the CM as one of the defining factors to increase the

competitive performance.

Thus, in order to promote the increase of company share capital,KMG-RM fully corresponds to the

highest standards of corporate management, which primarily aim to provide the shareholder with the

efficient management control and activity monitoring. Suchcontrolincludesboththeinternal management

procedures and the external legal and control mechanisms, which promote the responsibility, integrity and

transparency of the company.

Corporate Governance bodies The Company governance structure consists of the following bodies:

1. The SoleShareholder – the superior body;

2. The BoardofDirectors – themanagementand strategic decisions-making body, electedbythe

SoleShareholder;

3. TheManagementBoard- theexecutivebody of professional regulators responsible for the strategic

initiatives implementation and operational management.

The committees under the Board of Directors of «KMG-RM» JSC

Inordertopromotetheefficientperformance, theBoardofDirectorshasthe Internal Audit Committee andHR

and Remuneration CommitteeofKMG-RMBoardofDirectors (hereafter- the Committees).

AccordingtotheCorporateManagementCoderequirement, eachCommitteeconsistsof 3 (three) members, 2

(two) of which are the independent directors. The Chairman of the Committees becomes elected from among

the independent directors.

DuetotheexpirationofthetermofofficeoftheBoardofDirectorsofKMG- RMinAugust,

itwasdecidedtoelectthenewcomposition of the Board of Directors Committees.

TheHRandRemunerationCommitteeoftheKMG-RMBoardandDirectorsisasfollows:

Okaev Yerkeblan Kabiyevich independent director, the Chairman of the Committee

AbduovNurlanKanatovich independent director

TanatarovaSharaBakhytzhanovna representative of the Sole shareholder in the Board of Directors of

KMG-RM

The Internal Audit Committee of the Board of Directors of KMG-RM (was in recess in 2014):

AbduovNurlanKanatovich independent director, the Chairman of the Committee

Okaev Yerkeblan Kabiyevich independent director

SyrgabekovaAssiya Narymanovna representative of the Sole shareholder in the Board of Directors of

JSC NC KazMunayGas

Themeetings of HRandRemunerationCommitteeofKMG-RMBoardofDirectorsare held as required.

Therewere 4 (four) meetings of HR and Remuneration Committee of KMG-RM Board of Directors in 2014,

where the following issues were considered:

• changesinthestructureofthe KMG-RM Management Board and Management Board management;

• remunerations to the executives of KMG-RM by the records of 2013;

• determinationofthesizeandtermsoftheKMG-RMManagementBoardandtheKMG-RM

DirectorGeneral (the Chairman of the Board), membership election (appointment) of the KMG-RM

Management Board and their early resignation.

The voting took place both inpersonand in absentia. All members of the KMG-RM Board of Directors

cast their votes regarding the HR and remuneration issues. TheHRandremunerationCommittee considered

those issues and had provided the Board of Directors with recommendations regarding the voting.

Remunerationoftheindependentdirectors

31

Thetermsoftheremunerationpaymentsandexpensesreimbursementfortheindependentdirectorsaredefinedin

theRemunerationandExpensesReimbursementRegulations for the independentdirectorsof «KazMunayGas»

NCJSCstock companies.

Theindependentdirectorsreceivefixed remuneration set by the Sole Shareholder of KMG-RM.

BytheresolutionoftheSoleShareholderunderAugust 16, 2011 andJuly 18, 2014, the fixedremunerations

were set for the independent directors of KMG-RM along with concluding the correspondent contracts.

Theremunerations for the independent directors amounted to 14 500 000 tenge in 2014.

The other members of the Board of Directors do not receive any remunerations for their work as the

members of the Board of Director.

Relations with the Sole Shareholder

«KazMunayGas – RM » JSC is a subsidiary of«KazMunayGasNational Company» JSC, which holds 100%

of shares of «KazMunayGas – RM» JSC.

«KazMunayGas» National Company JSC and «KazMunayGas – RM» JSC cooperate within the Law of the

Republic of Kazakhstan «On joint-stock companies», in accordance with Companies’ Articles of

association, as well as in accordance with the principles of corporate governance set out inthe internal

documents

CorporategovernancemechanismsforKMG-RM company group:

Constructinga vertical governance system for the subsidiaries and affiliated companies based on the

leading principles of the best corporate governance experience;

Introducing unified corporate standards for the subsidiaries and affiliates;

Recommendingown representatives for the administration in the subsidiaries and affiliates;

Inspecting thesubsidiariesandaffiliatesbytheadministration representativesandsupervisors, business

and financial performance auditing, selecting the auditor etc.

Relationswiththesubsidiariesandrelated entities The Company is a parent company for the group of subsidiaries and affiliated companies, cooperation

with which is carried out as follows:

- participation of representatives of «KazMunayGas – RM» JSC in the work of Superior bodies, Boards

of Directors/Supervisory Boards of subsidiaries and affiliated companies;

- taking individual decisions, in accordance with current legislation, by the relevant body of

«KazMunayGas – RM» JSC on activities of subsidiaries, where «KazMunayGas – RM» JSC RM is the sole

participant/shareholder;

- adoption of common corporate policies and standards, implementation of coordinated and effective

strategy and investment policy of «KazMunayGas – RM» JSC, its subsidiaries and affiliated companies;

BytheresolutionofKMG-RMSoleShareholderunderJuly, 18th

, 2014, thecomposition of 5 (five) members

of BoardofDirectorswas re-elected for a term of 3 (three) years.

BytheresolutionofKMG-RMSoleShareholderunderJuly, 15th

, 2014, Syrgabekova Assiya Narymanovna

was elected as the Chairman of the Board of Directors.

On the meetings of the Board of Directors

By the resolution of the Sole Shareholder under August, 16th

, 2011 (minutes of meeting of the Board of

Directors of KMG NC №116)the composition of the KMG-RM Board of Directors was elected totaling to 6

(six) persons in total for a term of 3 (three) years.

BytheresolutionoftheSoleShareholderunderFebruary, 20th

, 2014 (minutes of meeting of the Board of

Directors of KMG NC №1/2014)the composition of the KMG-RM Board of Directors was downsized to 5

(five) persons.ConcurrentlyMusaibekovMaratzhanZhunusbekovichwas discharged from the position of the

Member of the Board of Directors in advance on October 13th

, 2013, and Tanatarova Shara Bakhytzhanovna

was elected in the position of a member of the KMG-RM Board of Directors for the term generally set for

the KMG-RM Board of Directors.

By the resolutionoftheKMG-RMSoleShareholderonJuly 18th

, 2014 (minutes of meeting of the KMG-

RM Board of Directors №10/2014) the composition of the Board of Directors was re-elected totaling to 5

32

(five) persons for the term of 3 (three) years, due to the office term expiration

ofthemembersoftheBoardofDirectorsonAugust 16th

, 2014.

By the resolution of the Sole Shareholder of the KMG-RM under July, 15th

, 2014 (minutes of KMG

meeting №69), Syrgabekova Assiya Narymanovna was elected in the position of the chairman of the KMG-

RM Board of Directors.

TheBoardofDirectorsholdsitsmeetingsbasingontheprinciplesofrationality, efficiencyandregularity as

defined by the Board of Directors Work Plan, approved by the Chairman of the Board of Directors.

TheBoardofDirectorsheld 17 meetingsin 2014 (9 meetingsinpresentiaand 8 inabsentia).

Thetotalnumberofquestionsamountedto146.

Inaddition, duringthegiven yeartheBoardofDirectorsconsidered the following issues:

• preliminaryapprovaloftheconsolidatedfinancialrecordsandthe financial records of the preceding

year;

• theproposaltotheSoleShareholderonthedistributionof 2013 KMG-RMnetprofit and 2013 dividends

per one common Company stock;

• determinationofthetermsofoffice, theofficialsalaryrates, thetermsofpayment and remuneration for

the Company Director General (the Chairman of the Management Board);

• re-election of the composition of the KMG-RM Management board for the new term;

• approval of the consolidated and individual business-plan of the KMG-RM for 2014-2018;

• remunerationsoftheKMG-RMAdministrativeandExecutiveofficial by the results of work in 2013;

• competence-relatedissuesregardingthegeneral meetings of members/stockholders of the KMG-RM

subsidiaries and affiliates;

• theBoardofDirectorsandtheManagementBoardactivity report for 2013;

• KMG-RM annual report for 2013;

In 2014, the Board of Directors approved the following documentation of KMG-RM:

• The redrafted SecurityInstructionforthecommerciallyconfidentialinformationof «KazMunayGas-

RM» JSC;

• Treasury policies of the «KazMunayGas- RM» JSC;

• BusinesstripsRegulations for the employees of «KazMunayGas- RM» JSC;

• Changes and amendments to the Rules of development, coordination and approval of the

organization structure and working schedule of «KazMunayGas- RM» JSC, approved by the resolution of

the Board of Directors under December 22, 2011 (minutes №21/2011);

• «KazMunayGas- RM» JSC Development Strategies for 2014-2022;

• Sponsorshipandcharity support Rules of «KazMunayGas- RM» JSC;

• UnifiedintercommunicationsystemRegulations among the employer and the employees of

«KazMunayGas- RM» JSC and its subsidiaries and affiliates;

• OrganizationRegulationsof the property acquisition financing by employees of «KazMunayGas-

RM» JSC;

• Approved business process reengineering Program for «ATYRAU REFINERY» (Atyrau Oil

Refinery Plant) LLP, «POCR» (Pavlodar Oil Chemistry Refinery) LLP for 2014-2017.

In 2014, the KMG-RM Board of Directors made resolutions onclosing of the following deals:

• themajoroperationwith «KazmunaygasEP» JSCwhichactedfor and on behalf of «Ozenmunaygas»

JSC, whereat oil purchase contracts were concluded amounting up to 132 403 985 280 (one hundred thirty

two billion four hundred three million nine hundred eighty-five thousand two hundred eighty) tenge

including VAT;

• thedealwiththeKMG-RMinterest, concludedbysigningapledgeagreementwith «Bank of China

Kazakhstan» AB JSC and «PetroKazakhstan Oil Products» LLP upon the funds on a bank deposit account;

• thedealwiththeKMG-RMinterest, concludedwith «PetroKazakhstan Oil Products» LLP upon the

credit granting (loan) in favor «PetroKazakhstan Oil Products» LLP;

33

• thedealwiththeKMG-RMinterest, byconcludingasupplementarycontract №1

tothepledgeagreementwith «Bank of China Kazakhstan» AB JSC and «PetroKazakhstan Oil Products» LLP

upon the funds on a bank deposit account №14504//41-2014 under February, 5th

, 2014;

• expansion of KMG-RM liabilities by 10% of the company equity capital by gaining credit form

«Sberbank of Russia» JSC;

• approval of granting KMG-RM a loan in favor «PetroKazakhstan Oil Products» LLP;

TheKMG-RMBoardofDirectorsmadetheresolutions ontheissues related togeneralstockholders

(participants) meetings activities of the legal party whereat ten or more percent of the stocks (equity capital

share) belong to KMG-RM.

The following important resolutionson the affiliated companies and the subsidiaries of KMG-

RM were made:

• approval of the Codes of the subsidiaries and affiliates;

• approvaloftheparticipationof «ATYRAU REFINERY» LLPinworkof «Liquefied petroleum gas

storage park» LLP by purchasing 50%of the equity capital participation interest of «Liquefied petroleum gas

storage park» LLP;

• approval of the annual financial reports of the subsidiaries and affiliates on net income distribution by

the results of 2013;

• approvaloftheacquisitionby «ATYRAU REFINERY» LLP 30% interest share of the equity capital of

«РТИ-ATYRAU REFINERY» LLP amounting to 55 560 tenge from «Petroleum» LLP;

• adjustmentoftheamountof «KazMunayGasOnimderi» LLP equity capital reducing it to 1 489 343 000

(one billion four hundred eighty-nine million three hundred forty-three thousand) tenge;

TheBoardofDirectorsofKMG-RMalsoconsideredseveraldealsof «KazMunayGasOnimderi»

LLPrelatedto the sales of oil products, imported from the Russian Federation as a part of the Act of the

Republic of Kazakhstan №P-176 «On several issues of oil and oil products supplies from the Russian

Federation» under March 4, 2014. ThroughouttheyeartheBoardofDirectorswasconsideringandapprovingtheresolutionupontheapprovalthei

nternaldocumentationofthesubsidiarycompaniesandreconsideredthecompositionoftheexecutivebodiesoftheM

anagementBoard, SupervisoryBoardsandAudit Committees of the subsidiary companies.

TheBoardofDirectorsmaderesolutionsonthesale (disposal) of 50% interest share of KMG-RM in the

Authorized Fund of «TransMunay» JSC in favor of «TransMunay» JSC and approved the liquidation

balance of «KMG-Astana» LLP.

Also, some certain subsidiaries and affiliates activity-related issues were considered in the accordance

to the Coda and internal company documents.

KMG-RMManagementBoardactivity

Management of the day-to-day operations of «KazMunayGas – Refining and Marketing» joint stock

company is carried out by the executive collegial body – the Management Board.

The Management Board of «KazMunayGas – RM» JSC is headed by the Director General (Chairman of

the Management Board).

The composition and the election of members of the Management Board is determined by the legislation

of the Republic ofKazakhstan, the Code regarding the requirements of the present Provision on the

Management Board.

TheManagementBoardof «KazMunayGas-RM» JSC consists of minimum 5 (five) persons. The Sole

Shareholder’s representatives and «KazMunayGas-RM» JSC employees, who do not represent the Sole

Shareholder can be appointed as themembersoftheManagementBoardof «KazMunayGas-RM» JSC.

TheManagementBoardhastheauthoritytomakeresolutionsuponanycompanyactivity-relatedissues, ifnot

designated by the legislation of the Republic of Kazakhstan and the Company Code to other offices and

officials of KMG-RM.

In 2014, theManagementBoardheld 39 meetings, where 327 issueswereconsidered, including: 100

«KazMunayGas-RM» JSCcompetence-relatedissues, 8 preliminary approval issues related to the

competence of the Sole Shareholder of KMG-RM, 46 preliminaryapproval issues related to the competence

of the Board of Directors of «KazMunayGas-RM» JSC, 62 issues on the conclusion of deals (Enclosure №1)

34

and 106 issues related to the competence of the Sole Shareholder, OSM, OSA, subsidiaries and the affiliated

bodies, 5 other issues.

Changes in the composition of the Management Board of «KazMunayGas-RM» JSC in 2014:

February 7, 2014

- authority termination of the member of the Management Board – Musin M.K.

- election (appointment) as a member of the Management Board- Kabdushev A.D.

May 23, 2014

- authority termination of the member of the Management Board – Akishev A.N.

- election (appointment) as a member of the Management Board-Koibagarov Y.A.

October7, 2014

- thecomposition of the Management Board was established – 6 (six) members with 3 (three) years of

term.

- election of the Management Board composition: Tiyesov D.S., Kozhabaev Y.O., Musaibekov M.Z.,

Bekturov R.S., Koibagarov Y.A., Kabdushev A.D.

December 12, 2014 .

- thecomposition of «KazMunayGas-RM» JSC Management Board was established –7 (seven) members

- election (appointment) as a member of the Management Board- Mazhenov M.M.

Selection criteria for members of the Board of Directors and the Management Board and their

independence

The process of selection and election of members of the Board of Directors, including independent

directors, shall be carried out in a manner prescribed by the Law of the Republic of Kazakhstan ―On joint

stock companies‖, the Company’s articles of association and Corporate governance code in accordance with

established internal procedures, based on sufficient information about the candidate for a position of

director, information on the relations between the candidate and the Company (affiliation, collaboration, and

others), the independence criteria, information about the relevant work experience, knowledge,

qualifications, positive achievements, and an impeccable reputation.

An eligible candidate for a member of the Board of Directors and a member of the Board of Directors

shall be only a physical person who has to have the trust of shareholders and other members of the Board of

Directors, an impeccable reputation, professional knowledge and skills, experience in executive positions for

at least three years, preferably in the area corresponding to the main activity of the Company, positive

achievements and an impeccable reputation in the business and industrial environment.

An elected independent Director of the Board of Directors shall be the person:

- who is not and was not affiliate of the Company within three years prior to his election to the Board of

Directors (except in the case of his tenure as an independent director of the Company), was not affiliated

with the affiliates of the Company;

- who does not have reporting relationship with the Company’s officers or organizationsaffiliates of the

Company and did not have reporting relationship with such persons within three years preceding his election

to the Board of Directors;

- who is not a government official;

- who is not a representative of a shareholder at the meetings of the Company’s bodies and was not a

representative of a shareholder within three years prior to his election to the Board of Directors;

- who is not involved in auditing the Company as an auditor employed with an audit organization, and

did not take part in such audits within three years prior to his election to the Board of Directors.

Management of the day-to-day operations of the joint-stock company KazMunayGas – Refining and

Marketing (hereinafter referred to as JSC KazMunayGas – RM, the Company) is carried out by the

executive collegial body – the Management Board.

The Management Board of JSC KazMunayGas – Refining and Marketing is headed by the General

Director (Chairman of the Management Board). Responsibilities of the General Director (Chairman of the

Management Board) are determined by the legislation of the Republic of Kazakhstan, Articles of

association, resolutions of the Sole shareholder and the Board of Directors. Formation of the Management

Board and election of its members are carried out in accordance with the legislation of the Republic of

35

Kazakhstan, Articles of association, and internal documents.

Members of the Management Board of JSC KazMunayGas – RM may be representatives of the Sole

shareholder and employees of JSC KazMunayGas – RM who are not representatives of the Sole shareholder.

Equitycapital

KMG-RMequitycapitalasofDecember 31, 2014 amountedto863 139 880 thousand tenge (615 535

217common stocks). 100% of «KazMunayGas- refinery and marketing» JSC.

KMG-RMPlansfor 2015

IntermsofKMG-RMDevelopmentPlantherewere performanceindicators approved for KMG-RM for

2015. thousands tenge

«KazMunayGas- RM» JSC

Name Unit of measurement 2015

Oil refinery volume thousands tons 13 100

Oil products sales volume thousands tons 3 328

Asphaltic cement production thousands tons 490

Refinery yield % 70,48

ATYRAU REFINERY 56

POCR 79

PKOP 72,4

RISKS MANAGEMENT

«KazMunayGas – RM» JSC considers risk management as one of the most important elements of

strategic and corporate governance. This is the process by which KMG-RM regularly identifies, assesses and

monitors the risks as well as possibilities of their occurrence, adapts its activities to reduce the probability

and potential impact of risks.

The purpose of the risk management system is to achieve a balance between the maximum use of

opportunities in order to obtain benefits and prevent possible losses.

The main objectives of the risk management system are:

- establishment of a full-fledged information and organizational framework for decision-making and

planning process;

- provision of a continuous coordinated risk management process based on timely identification,

assessment, analysis and monitoring to ensure the achievement of the objectives set;

-enhancing the efficiency of use and allocation of resources;

- prevention of losses and damages by improving the operating efficiency.

To systematize and unify the process of organization of risk management, the Company developed and

updated internal regulatory documents:

1. «Risk management policy» of «KazMunayGas – RM» JSC» (resolution of the Board of Directors of

JSC KazMunayGas – RM No. 3 as of March 29, 2013);

2. «Risks management service Regulation»;

3. «Rules of organization of risk management process» of «KazMunayGas – RM» JSC» (resolution of

the Board of Directors of JSC KazMunayGas – RM No. 08/2011 as of May 11, 2011);

4. «Methodology for identifying and assessing risks, selection of risk management techniques of

«KazMunayGas – RM» JSC» (resolution of the Board of Directors of JSC KazMunayGas – RM

No.08/2011 as of May 11, 2011);

5. «Procedure for reporting and submission of reports of incidents in business processes of

«KazMunayGas – RM» JSC (resolution of the Board of Directors of JSC KazMunayGas – RM No.

08/2011 as of May 11, 2011);

36

In order to provide the insurance coverage of property interests of JSC KazMunayGas – RM and its

subsidiaries and affiliates, contracts for voluntary comprehensive property damage insurance and civil

liability are concluded on an annual basis.

Key risks for the period until 2017

№ Key Risks Risk management activities

1

.

Risk of decline in sales of oil products 1. Oil supply control and monitoring according to the

industrial program.

2.

Timelynotificationandrenderingofassistancerequestforregulatio

nofoildeliveryto the refinery.

3. Overstocking prevention and transport logistics

development.

2

.

Adverse price change for the oil

products/POL

Monitoring. Marketing. Cooperation between KMG-RM and

Oil and Gas Ministry of the RK and Natural Monopoly

Regulation Agency upon the issues of the distributed oil

products pricing whenthisparticularriskoccurs.

3

.

Currency risk 1. Considerationoftheappropriatecurrencyhedgingifrequired.

2. Credit contracts indexation.

4

.

Riskofcontroloftariffsforprocessingbyg

overnmentalauthorities

1.NMRAapplicationsfilingandsubmissionforthetariffs (rates)

increase.

2. Investmenttariffcertificationdocumentspreparation.

5

.

Rescheduling of Investment projects

for the reconstruction and

modernization of the oil refinery plants

Control and monitoring of:

1. Timelydevelopment completion of the operating

documentation (detailed engineering);

2. Timelyequipmentpurchaseordersplacement;

3. The choice of the competent equipment suppliers of the

required technical equipment required.

4. Timely contracts conclusion with the suppliers;

5. Carefully designed logistics for the equipment supply to the

oil refinery plant;

6. Timely financing of the equipment and material supply;

7.

Considerenforcingthepenalsanctionsincaseofthetermsviolation

ofplacingintooperationandexecution, whenconcludingEPC-

contract;

8. Making amendmentstotheTechnical regulationsof the

Customs union.

6

.

Delay in commissioning of the retail

chain facilities

1. Qualificationcriteriastrengthening for the contractors.

2.Timelyschedulingthestartoftheconstructionworks,

considering the terms of OCI acquisition.

3. Monitoringequipmentand materials prices on the market.

4.Makingequipmentsupplycontractsconsideringtheactualtime

of manufacture.

5.Timelyobtainingandcontrollingenvironmentalemissionpermit

s, development of approval of the emergency response plan.

7

.

Investment project appreciation Monitoringandtimelyexecution of the Investmentprojects.

8

.

Company financial/non-financial

covenants violation

1. Monitoring and execution of all financial/non-financial

covenants.

2. Monitoring the loaning capacity limits.

3. Interaction with banks if covenants violations occur.

37

INDEPENDENT AUDITOR’S REPORT

Opinion

38

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated

financial position of JSC KazMunayGas-Refining and Marketing and its subsidiaries as of December 31,

2014, as well as their consolidated financial results and cash flows for the year ended on the date first above

mentioned in accordance with International Financial Reporting Standards.

Ernst &Young LLP

February 20, 2014

A member firm of Ernst & Young Global Limited

Ernst & Young Kazakhstan LLP

Al-Farabi ave., 77/7

Esentai Tower

Almaty, 050060

Republic of Kazakhstan

Tel.: +7 727 258 5960,

Fax: +7 727 258 5961

/signature/ [stamp]

Bakhtiyor Eshonkulov

Auditor/Audit Partner

Auditor’s Certificate of Competence

No.MF-0000099 under August 27, 2012

as of August 27, 2012

/signature/ [stamp]

Eugeny Zhemaletdinov,

General Director

«Ernst & Young» LLP

State license

for auditing activities

in the territory of the Republic of

Kazakhstan:

series MFYu-2, No.0000003

as of July 15, 2005,

issued by the Ministry of Finance of the

Republic of Kazakhstan

39

Independent Auditors’ Report

Attn: Shareholder and Management of «KazMunayGas -Refining and Marketing» JSC

We have audited the enclosed consolidated financial statements of «KazMunayGas -Refining and

Marketing» JSC and its subsidiaries (hereafter –«Group»), which includes the consolidated statement of

financial position as of December 31, 2013, consolidated statement of comprehensive income, consolidated

statement of changes in equity and consolidated statement of cash flows for the year ended on the date first

above mentioned, as well as information on significant aspects of the accounting policy and other remarks.

Management’s responsibility for the consolidated financial statements The Group’s management is

responsible for the preparation and fair presentation of these consolidated financial statements in accordance

with International Financial Reporting Standards, as well as the internal control procedures that in the

management’s opinion are required to ensure the preparation of the consolidated financial statements, which

are free from material misstatements, whether due to fraud or error.

Auditors’ responsibilities

Our responsibility is to express an opinion on these consolidated financial statements based on audit carried

out by us. We conducted our audit in accordance with International Auditing Standards. Those standards

require that we comply with standards of ethics and plan and perform the audit to obtain reasonable

assurance about the absence of material misstatement of the consolidated financial statements.

An audit involves performing procedures to obtain audit evidence about the amounts and information

provided in the consolidated financial statements. The procedures are selected basing on the auditor’s

judgment, including the risks assessment of material misstatement of the consolidated financial statements

due to fraud or error. In assessing this risk, the auditor considers internal control aspects relevant to the

preparation and fair presentation of consolidated financial statements in order to determine auditing

procedures that are appropriate in certain circumstances, but not for the purpose of expressing an opinion on

the effectiveness of the internal control system of the entity. An audit also includes evaluating the

appropriateness of the accounting policy selected and the reasonableness of accounting estimates made by

the management, and evaluation of the presentation of the consolidated financial statements as a whole.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

opinion.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION(continued)

AsofDecember 31, 2014

40

In thousands of tenge Note 2014

2013

(recalculated)*

January 1, 2013

(recalculated)*

Assets

Long-term assets

Fixed assets 8 412.923.367 356.327.359 268.111.677

Goodwill 9 90.003.639 90.003.639 90.003.639

Intangible assets 2.345.408 2.497.875 2.101.821

Investments in joint venture 10 24.653.727 15.172.762 18.511.433

Other long-term investments 3.361.562 734.141 791.463

Advances for long-term assets 11 67.452.734 33.392.418 71.812.079

Loansgrantedtotherelated parties 12 73.168.985 367.329 −

VAT receivable 4.255.411 276.214 184.139

Long-termassetsfee 13 16.548.913 18.443.755 18.098.590

Deferred income tax assets 30 2.450.997 1.882.754 1.845.561

Other long-term assets 14 5.176.791 5.599.312 4.664.496

702.341.534 524.697.558 476.124.898

Current assets

Inventories 15 45.173.787 39.798.994 33.519.178

Tradereceivables 16 7.274.745 13.657.454 12.284.811

Advances paid 13.024.251 5.764.359 15.524.690

VAT receivable 21.705.118 16.585.329 11.982.414

Income taxes prepaid 3.462.315 1.020.926 4.080.936

Loansgrantedtotherelated parties 12 1.220.096 − −

Other current assets 4.873.540 3.914.305 1.940.283

Short-term bank deposits 17 15.064.622 15.880.219 15.970.999

Cash and cash equivalents 17 41.221.964 49.600.958 52.729.400

153.020.438 146.222.544 148.032.711

Assets classified as held for sale 22.182 49.530 859.218

153.042.620 146.272.074 148.891.929

Total assets 855.384.154 670.969.632 625.016.827



41


2013

(recalculated)*

January 1, 2013

(recalculated)*

Equity and liabilities

Equity

Equity capital 18 863.139.880 858.364.480 858.364.480

Accumulated loss (452.096.475) (469.717.353) (493.834.727)

Other reserve capital (718.401) (773.596) −

Foreign currency translation reserve 4.987.735 4.707.229 5.051.793

Attributable to equity holder of the Parent

company 415.312.739 392.580.760 369.581.546

Non- controlling interest 18 410.202 470.919 340.978

Total equity 415.722.941 393.051.679 369.922.524

Long-term liabilities

Borrowings 19 324.482.852 148.380.022 127.101.235

Deferred income tax liabilities 30 13.500.187 14.696.649 16.080.231

Provisions 20 1.527.081 1.704.614 840.877

Other long-term liabilities − − 4.071

339.510.120 164.781.285 144.026.414

Current liabilities

Borrowings 19 51.921.291 54.227.190 57.909.244

Trade accounts payable 21 19.907.011 22.190.261 16.058.019

Other taxes payable 2.733.918 2.957.013 6.288.251

Advances received 4.943.945 16.613.231 13.909.731

Provisions 20 9.197.570 9.395.739 9.572.873

Income taxes payable 587.863 34.456 1.112.392

Other current liabilities 22 3.942.410 2.685.277 1.965.254

Current liabilities 23 6.917.085 5.033.501 4.252.125

100.151.093 113.136.668 111.067.889

Total liabilities 439.661.213 277.917.953 255.094.303

Total equity and liabilities 855.384.154 670.969.632 625.016.827

* Someofthefiguresabovedonotcorrespondtothefiguresfromtheannual consolidatedfinancialrecordsasofDecember 31, 2013,




42


2013

(recalculated)*

Ongoing activity

Income from the sales of products and services rendered 24 416.923.410 572.713.328

Costofgoodssoldandrenderedservices 25 (312.060.989) (461.551.307)

Gross profit 104.862.421 111.162.021

Shippinganddistributioncosts 26 (44.752.829) (40.583.052)

Otheradministrativecosts 27 (17.025.584) (23.292.598)

Other operating income 4.626.029 4.457.800

Other operating costs (1.549.808) (4.960.648)

Operating income 46.160.229 46.783.523

Foreign net exchange loss 29 (30.148.354) (1.187.235)

Financial income 4.069.669 1.162.953

Financial costs 28 (6.154.070) (2.986.759)

Profits/(loss) shareofjointventures 10 7.333.427 (3.338.671)

Gain on subsidiaries disposal 4 2.811.312 −

Pre-tax profit from ongoing activity 24.072.213 40.433.811

Income tax costs 30 (4.902.336) (14.942.970)

Netprofitfortheyearfromongoingactivity 19.169.877 25.490.841

Dismissed activity

Loss after taxfortheyearofdismissedactivity (44.618) (225.111)

Netprofitfortheyear 19.125.259 25.265.730

To be accounted for:

Parent company stockholder 19.155.303 25.223.114

Non- controlling interest (30.044) 42.616

19.125.259 25.265.730

Other income in total

Accounted currency conversion 280.506 (344.564)

Actuarialgains/(losses) scheduledwithfixedpayments 55.195 (773.596)

Totaljointnet-of-tax incomeforthereportedyear 19.460.960 24.147.570

To be accounted for:

Parent company stockholder 19.491.004 24.104.954

Non- controlling interest (30.044) 42.616

19.460.960 24.147.570

* Someofthefiguresabovedonotcorrespondtothefiguresfromtheannual consolidatedfinancialrecordsasofDecember 31, 2013,


CONSOLIDATED FINANCIAL STANDING REPORT (continued)

43

As of December 31, 2014

In thousands KZT notes. 2014

2013

(recalculated)*

Cashflowfromoperatingactivities

Profit before income tax from continuing activities 24.072.213 40.433.811

Loss before tax from discontinued activities (44.618) (215.324)

Profitbeforetax 24.027.595 40.218.487

Adjustments against:

Ageing and amortization 25, 26, 27 26.540.123 24.824.291

Share in the (profit)/ lossof joint venture companies 10 (7.333.427) 3.338.671

Financial expenses 28 6.154.070 2.986.759

Financial income (4.069.669) (1.162.953)

Lossfromimpairmentoffixed assets and intangible assets 26, 27 3.131.109 1.419.345

Depreciation of investment in joint venture companies 10 − 691.011

(Decrease)/increase of reserves (268.045) (150.761)

Allowanceofreservesfordoubtfuldebts 16 1.965.007 1.536.287

Proceeds from retirement of a subsidiary 4 (2.811.312) −

Allowance of reservesfornonliquidinventories 27 215.895 1.075.927

Income/ (loss)fromfixed asset retirement (140.414) 858.467

Unrealizedgainfromforeignexchange 30.190.941 1.361.393

77.601.873 76.996.924

Changeininventories (7.003.633) (7.355.743)

Changeintradereceivablesandmiscellaneouscurrentassets (14.124.694) 8.374.668

ChangeinVATreimbursableandothertaxespayable (9.322.998) (7.923.616)

Changeintradepayableandmiscellaneousliabilities 4.343.458 5.196.549

51.494.006 75.288.782

Incometaxpaid (8.555.023) (14.381.671)

Fee paid (12.517.526) (6.425.978)

Interest received 1.328.468 1.145.285

Netcashinflowfromcontinuingoperatingactivities 31.749.925 55.626.418

Netflowofcashfromdiscontinuingoperatingactivities − (1.032.394)

Netflowofcashfromoperatingactivities 31.749.925 54.594.024

Net flow of cash received from investment activities

Placement of bank deposits for a period more than three months and

more than one year (108.252.667) (13.115.239)

Proceedsfrombankdepositsforaperiodmorethanthreemonthsandmorethan

oneyear 108.522.907 13.199.820

Acquisitionoffixedassetsandintangibleassets (39.805.048) (65.562.336)

Cashinflowfromsaleoffixedassetsandintangibleassets 30.405 27.702

Acquisitionofassociated company (55) −

Investments into joint venture company 10 (2.200.000) (600.000)

Recurringadvanceissued (47.450.539) (2.699.729)

Loans provided to related parties 12 (72.344.000) −

Payment of commission on long-term loans (6.175.585) (1.774.642)

Netuseofcashincontinuinginvestmentactivities (167.674.582) (70.524.424)

Netflowofcashfromdiscontinuinginvestmentactivities − −

Netflowofcashfrominvestmentactivities (167.674.582) (70.524.424)



In thousands KZT Notes. 2014 2013

(recalculated)*

44

Net flow of cash from financial activities

Proceedsoflong-termloans 19 184.463.028 55.387.470

Repaymentoflong-termloans 19 (46.276.643) (24.624.643)

Netflowofshort-termloans − (16.726.415)

Contributions to share capital − 3.969.293

Dividends paid 18 (10.921.228) (5.741.390)

Netinflowofcashfromcontinuingfinancialactivities 127.265.157 12.264.315

Netflowofcashfromdiscontinuingfinancialactivities − −

Netflowofcashfromfinancialactivities 127.265.157 12.264.315

Net foreign exchange difference 280.506 537.643

Netdecreaseofcashandits equivalents (8.378.994) (3.128.442)

Cashandits equivalents as of the beginning of the year 17 49.600.958 52.729.400

Cash and its equivalents as of the end of the year 17 41.221.964 49.600.958

* Certain amounts given above are inconsistent with those given with the consolidated financial statements for the year ended December

31, 2013 and reflect adjustments made as detailed in Note 6.

SIGNIFICANT NON-CASH TRANSACTIONS. ADDITIONALDISCLOSURES

Tollowingnon-cashtransactionswereexcludedfromtheconsolidatedcashflowstatement:

In April 2014, the authorized capital of the Group was increased by 4.775.400 thousand KZT as a result of

the transfer of 97.8% stake of the JSC «Kazakhstan Petrochemical Industries» by the Shareholder in favor of

the Group (Note 18).

In 2014 the Group recognized a discount on loans received from theShareholder in the amount of 14,131,530

thousand KZT (Note 19).

During 2014 the Group also:

1) capitalized accrued expenses on interest and amortization of the commissions on loans obtained for the

construction of the complex of aromatic hydrocarbons and construction of deep refining complex at the

Atyrau Oil Refinery (hereinafter "AOR") in the amount of 18.231.016 thousands KZT (in 2013 – 11.722.

771 thousand KZT);

2) acquired the fixed assets due to the increase in accounts payable totaling 197.455 thousandsKZT (in 2013

– 3.016.452 thousands KZT);

3) a bank letter of credit from the Export-Import Bank of China (hereinafter the "Ex-Im Bank") in the

amount of 15.146.448 thousandsKZT (in 2013 - null), i.e.the bank made direct payments to suppliers of the

Group for the work performed in the AOR;

4) work on capital construction was accepted at the expense of previously paid advances totaling 13.390.223

thousands KZT (in 2013 – 41.119.390 thousandsKZT), which was classified as construction in progress;

5) capitalization of inventories during the upgrading of the Pavlodar petrochemical plant (hereinafter

"PPCP") under the constructionin progress totaling 1.412.945 thousandsKZT (in 2013 - null);

6) the acquisition of 30% stake of LLC "RTI-AOR" by making the fixed assets in the amount of 1.477.218

thousandsKZT.



45

Attributable to a shareholderof the Company

In thousands KZT

Authorized capital

Miscellaneous reserve

capital

Reporting currency

recalculation reserve

Accumulated loss Total

Non-controlling

participatory interest Total

As of December 31,

2012 (recalculated*) 858.364.480 − 5.051.793 (493.834.727) 369.581.546 340.978 369.922.524

Net profit for the year − − − 25.223.114 25.223.114 42.616 25.265.730 Miscellaneous

aggregate loss − (773.596) (344.564) − (1.118.160) − (1.118.160)

Miscellaneous aggregate income for year − (773.596) (344.564) 25.223.114 24.104.954 42.616 24.147.570

Dividends(Note 18) − − − (5.741.390) (5.741.390) − (5.741.390) Contribution to capital

(floating of shares) KPI (Note 5) − − − 3.881.968 3.881.968 87.325 3.969.293

Transactions with the shareholder(Note 19) − − − 753.682 753.682 − 753.682

As of December 31, 2013 (recalculated*) 858.364.480 (773.596) 4.707.229 (469.717.353) 392.580.760 470.919 393.051.679

Net profit for the year − − − 19.155.303 19.155.303 (30.044) 19.125.259 Miscellaneous

aggregate loss − 55.195 280.506 − 335.701 − 335.701

Total aggregate income for year − 55.195 280.506 19.155.303 19.491.004 (30.044) 19.460.960

Dividends(Note 18) − − − (10.890.555) (10.890.555) (30.673) (10.921.228) Contribution to capital

(floating of shares)(Note 18) 4.775.400 − − (4.775.400) − − −

Transactions with the shareholder(Note 19) − − − 14.131.530 14.131.530 − 14.131.530

As of December 31, 2014 863.139.880 (718.401) 4.987.735 (452.096.475) 415.312.739 410.202 415.722.941

* Certain amounts given above are inconsistent with those given with the consolidated financial statements for the year ended December

31, 2013 and reflect adjustments made as detailed in Note 6.

Enclosure №1

List of transactions for 2014, in which there is interest

46

1. On conclusion of a procurement contract of refined petroleum products with «Atyrau

Refinery»LLP№ 02-2014 dated 06.01.2014.

2. On conclusion of procurement contracts of tenancy (lease)services of facilities of sales network

of oil and gas with «KazMunaiGas Onimderi» JSC №517-2013 dated 31.12.2013.

3. On conclusion of procurement contracts of services of tenancy (lease) of testing laboratorieswith

«KazMunaiGas Onimderi» JSC №20-2014 dated 20.01.2014

4. On conclusion of procurement contracts of services of tenancy (lease) ofvehicle with

«KazMunaiGas Onimderi» JSC №524-2013 dated 31.12.2013.

5. On conclusion of procurement contracts of services of attorney with «KazMunaiGas Onimderi»

JSC №233-2014 dated 15.01.2014.

6. Onconclusionofprocurementcontractsofservicesof arranging and conducting of trainings for

employees of the «KazMunaiGas - Refinery and Marketing»JSC with «Samruk-Kazyna» corporate

university» Private Institution№26-2014 dated 20.01.2014

7. Onconclusionofcontractsof staff development (HR Services) for ―KazMunaiGas –Refinery and

Marketing‖JSC with «Samruk-Kazyna» corporate university» Private Institution№09-2014 dated

10.01.2014.

8. Onconclusionofprocurementcontractsoftechnical support of local content monitoring map with

LLP «Samruk-Kazyna Contract»№10-2014 dated 10.01.2014.

9. Onconclusionofprocurementcontractsofthe right to use the «Samruk-Kazyna» JSC e-Procurement

Information System with «Samruk-Kazyna Contract»LLP №04-2014 dated 10.01.2014.

10. Onconclusionofcontractsof services of definition of price ranges planned for procurement of

goods№21-2014 dated 20.01.2014.

11. Onconclusionof Supplement Agreement with «KazMunaiGas Onimderi» JSC №1 dated

27.01.2014 to procurement contract of services of tenancy (lease) of refined products and gas network

objects №517-2013//17-2014 dated 31.12. 2013.

12. OnconclusionofSupplement Agreement№1 with «KazMunaiGas Onimderi» LLP dated

17.02.2014 to procurement contract of services of attorney №16-2014//233-2014 dated 15.01.2014.

13. Onconclusionofprocurement contractsof services of attorney with «KazMunaiGas Onimderi»

LLP №59-2014 dated 17.02.2014, related to the implementation of "Expansion of the network of gas

stations in the Mangistau region"investment project.

14. OnconclusionofSupplement Agreement№1 with «KazMunaiGas Onimderi» LLP to the

procurement contract of refined petroleum products№471-2013/3-2014 dated 26.12.2013, related to the

transformation of the «KazMunaiGas Onimderi» JSC into «KazMunaiGas Onimderi» LLP

15. OnconclusionofSupplement Agreement№1 with «KazMunaiGas Onimderi» LLP to the

procurement contract of services of transport expedition№12-2014 dated 28.12.2013//518-2013 dated

31.12.2013related to the transformation of the «KazMunaiGas Onimderi» JSC into «KazMunaiGas

Onimderi» LLP

16. OnconclusionofSupplement Agreement№2 with «KazMunaiGas Onimderi» LLP dated

13.02.2014 to the procurement contract of services of tenancy (lease) of refined products and gas network

objects№17-2014//517-2013 dated 31.12.2013.

17. OnconclusionofSupplement Agreement№1 dated 28.02.2014 with «KazMunaiGas Onimderi»

LLP to the procurement contract of services oftenancy (lease) of testing laboratory№20-2014 dated

20.01.2014.


LLP to the procurement contract of services oftenancy (lease) of vehicle №524-2013dated 31.12.2013.

19. Onconclusionof procurementcontractsofmotor gasoline AI-98№ 82-2014 / 490-2014 dated

19.03.2014 with «KazMunaiGas Onimderi» LLP.

20. OnconclusionofSupplementAgreement №2 dated 11.03.2014 with «KazMunaiGas Onimderi»

LLP to the procurement contract of services of attorney №108-2013//573-2013 dated 19.04.2013.


LLP to the contract № 38-2014 dated 30.01.2014, related to the transformation of the «KazMunaiGas

Onimderi» JSC into «KazMunaiGas Onimderi» LLP

47

22. OnconclusionofSupplementAgreement №2 with «KazMunaiGas Onimderi» LLP dated

21.02.2014 to the contract № 544-2012//156-2012 dated 24.04.2012,related to the transformation of the

«KazMunaiGas Onimderi» JSC into «KazMunaiGas Onimderi» LLP


21.02.2014 to the contract № 99-2013//508-2013 dated 02.04.2013,related to the transformation of the



21.02.2014 to the contract №527-2013//141-2014 dated 31.12.2013,related to the transformation of the



14.02.2014 to the contract №67-2014//13-2014 dated 31.12.2013,related to the transformation of the

«KazMunaiGas Onimderi» JSC into «KazMunaiGas Onimderi» LLP.

26. OnconclusionofSupplementAgreement №3dated21.02.2014 with «KazMunaiGas Onimderi»

LLP to the procurement contracts of services of attorney №544-2012//156-2012 dated 24.04.2012.

27 OnconclusionofSupplementAgreement №3dated21.02.2014 with «KazMunaiGas Onimderi»

LLP to the procurement contracts of services of attorney №99-2013//508-2013 dated 02.04.2013.

28. OnconclusionofCooperation Agreement with «Atyrau Refinery» LLP №159-2014 dated

28.04.2014.

29. OnconclusionofCooperation Agreement with «Pavlodar Oil Chemistry Refinery» LLP№162-

2014 dated 28.04.2014.

30. On conclusion with «Halyk Bank of Kazakhstan» JSC and «Atyrau Refinery»LLP of tripartite

agreements - supplement agreement №160-2014 dated 04.28.2014 to the agreement of the current account of

a legal entity №831 dated 01.09.2004 and the Supplement agreement 161-2014 dated 04.28.2014 to the

agreement of "Internet banking for legal entities" banking system№ 836-08 dated 23.10.2008.

31. On conclusion with «Halyk Bank of Kazakhstan»JSC and «Pavlodar Oil Chemistry

Refinery»LLP of tripartite agreements - supplement agreement №163-2014 dated 28.04.2014 to the

agreement of the current account of a legal entity №831 dated 01.09.2004 and the Supplement agreement

161-2014 dated 04.28.2014 to the agreement of the banking system "Internet banking for legal entities"№

836-08 dated 23.10.2008.

32. OnconclusionofSupplementAgreement with «KazMunayGas»NC JSC №1 dated 14.04.2014 to

the contract for a loan №288-28//386-2013 dated 18.10.2013.

33. OnconclusionofSupplementAgreementwith «KazMunaiGas Onimderi» LLP №2 dated

14.04.2014 to the procurement contracts of services of attorney dated 15.01.2014 № 16-2014//233-2014.

34. OnconclusionofSupplementAgreement №1 withLLP«KMG-Astana»dated 25.03.2014 to the

Settlement agreement (a mediation agreement) between ―KMG-Astana‖LLP and «Kyzyl-Aray Taular»LLP.

35. Onconclusionof procurement contract of petroleum with «Pavlodar Oil Chemistry

Refinery»LLP №10879.05/150-2014 dated 17.04.2014.

36. OnconclusionofSupplementAgreement№3 with «Atyrau Refinery» LLP dated30.05.2014 to the

contract for a loan №254-2012 dated 27.06.2012.





39. OnconclusionofSupplementAgreement №1 between Natixis (Paris, France) and «KazMunaiGas

Onimderi» LLP dated 22.05.2014 to the Corporate agreement on the revolving credit line№ 282-2013 dated

24.07.2013.

40. OnconclusionofSupplementAgreement №6between «Halyk Bank of Kazakhstan»JSC,

«Pavlodar Oil Chemistry Refinery» LLP and «KazMunaiGas Onimderi» LLP dated 06.05.2014 to the

Corporate agreement on the revolving credit line№ KS 01-11-24 dated 23.12.2011.

41. Onconclusionofagreementwith«KazMunaiGas – Service» LLPdated 31.05.2014 on termination

of the procurement contract of services for the office of «KazMunaiGas – Refining and Marketing» JSC№

476-2013 dated 26.12.2013.

42.Onconclusionofagreementwith«Semser security»LLPdated 31.05.2014 on termination of the

procurement contract of services of guarding of the facility № 475-2013 dated 26.12.2013.

48

43. Onconclusionofagreementwith«KazMunaiGas – Service» LLPdated 31.05.2014

onterminationoftheprocurementcontractofservicesoftenancyof passenger vehicles provided with drivers №

465-2013 dated 25.12.2013.

44. Onconclusionofagreementwith«KazMunaiGas – Service» LLPdated 31.05.2014

onterminationoftheprocurementcontractofservicesofmaintenance of passenger vehicles provided with drivers

№ 466-2013 dated 25.12.2013.

45. Onconclusionofprocurement contract of service of maintenance of «KazMunaiGas – Refining

and Marketing» JSC officewith«KazMunaiGas – Service» LLP №212-2014 dated 30.05.2014.

46. Onconclusionof procurement contract of service of guarding of the facility of «KazMunaiGas –

Refining and Marketing» JSC with«Semser security»LLP №213-2014 dated 30.05.2014.

47. Onconclusionofprocurementcontractwith «KazMunaiGas – Service» LLP ofserviceoftenancyof

passenger vehicles provided with drivers №217-2014 dated 02.06.2014.

48. Onconclusionofprocurementcontractwith «KazMunaiGas – Service» LLP ofserviceof

maintenance of passenger vehicles provided with drivers №216-2014 dated 02.06.2014.

49. OnconclusionofSupplementAgreement№2 dated 22.05.2014 with «KazMunaiGas Onimderi»

LLPto the procurement contract of refined petroleum products№ 471-2013/3-2014 dated 26.12.2013

50. OnconclusionofSupplementAgreement №4between ―Halyk Bank of Kazakhstan‖JSC,

«Pavlodar Oil Chemistry Refinery»LLP and «KazMunaiGas Onimderi» LLPdated 06.05.2014 to the

Corporate agreement on the non-cash loan (on current account) №1616 dated 23.12.2011.

51. OnconclusionofSupplementAgreement №3 with«KazMunaiGas Onimderi» LLPdated

29.05.2014 totheprocurementcontractofserviceofattorney №108-2013//573-2013 dated 19.04.2013.

52. Onconclusionofprocurementcontract of petroleum with LLP «Urikhtau Operating» № 235-

2014/139 dated 24.06.2014.

53. Onconclusionof contract of sale of petroleum products with «Kazakhstan Petrochemical

Industries»JSC №KPI-14/133 dated 24.06.2014.

54. OnconclusionofSupplementAgreement №1with«KazMunaiGas Onimderi» LLPdated19.06.2014

totheprocurementcontractof motor gasoline AI-98№ 82-2014/490-2014 dated 19.03.2014.

55. Onconclusionofprocurementcontract of petroleum with «Atyrau Refinery» LLP№ 992-14//239-

2014 dated 25.06.2014.

56. On conclusion of contract of sale of petroleum with«KazMunayGas Traiding A.G.» №221-214

dated 12.06.2014.

57. Onconclusionofprocurementcontract of service of training and certification of internal auditors

of «KazMunaiGas – Refining and Marketing» JSC with Private Institution ―The corporate university

«Samruk-Kazyna»№248-2014 dated 27.06.2014.

58. OnconclusionofSupplementAgreement №7between «Halyk Bank of Kazakhstan» JSC and

«KazMunayGas – Aero»LLP dated 26.09.2014 to the Agreement on the revolving credit line№KS 01-11-24

dated 23.12.2011.

59. OnconclusionofSupplementAgreement №7 dated26.09.2014 between «Halyk Bank of

Kazakhstan» JSC and LLP ―KazMunayGas – Aero‖ №5 dated 23.10.2014 to the Agreement on the non-cash

loan (on the current account) №1616 dated 23.12.2011.

60. On conclusion of contract for a loan between of «KazMunaiGas – Refining and Marketing» JSC

and «KazMunaiGas Onimderi» LLP№618-2014//1501-2014 dated 02.12.2014.

61. OnconclusionofSupplementAgreement №8 dated26.11.2014 between «Halyk Bank of

Kazakhstan» JSC and LLP ―KazMunayGas – Aero‖ and LLP ―Pavlodar Oil Chemistry Refinery‖ and

«KazMunaiGas Onimderi» LLPto the Agreement on the revolving credit line№ KS 01-11-24 dated

23.12.2011.

62. Onconclusionwith «Atyrau Refinery» LLP , «Pavlodar Oil Chemistry Refinery»LLP and

«KazMunaiGas Onimderi» LLP of Agreement on mutual recognition of digital signatures between

«KazMunaiGas – Refining and Marketing» JSC, ―Atyrau Refinery‖LLP, ―Pavlodar Oil Chemistry

Refinery‖LLP and «KazMunaiGas Onimderi» LLP №686-2014 dated 26.12.2014.

CONTACT INFORMATION

49

«KazMunaiGas – Refining and Marketing» JSC

010000, the Republic of Kazakhstan, Astana, Turan av., 1

Tel: +7-7172-97-97-01

«Atyrau Refinery» LLP

The Republic of Kazakhstan, Atyrau, Kabdolova st., 1

Tel.: +7-7122-259-335

«Pavlodar Oil Chemistry Refinery»LLP

The Republic of Kazakhstan, Pavlodar, Khimkombinatovskaya st., 1

Tel.: +7-7182-39-65-44

«PetroKazakhstan Oil Products» LLP

The Republic of Kazakhstan, Shymkent, Kapal Batyr st., 5

Tel.: +7-7252-94-01-00

«KazMunaiGas Onimderi» LLP

010000, the Republic of Kazakhstan, Astana, Kabanbay Batyr st., 17, BlockЕ

Tel.: +7- 7172-97-44-52

«KazMunayGas – Aero»LLP

The Republic of Kazakhstan, Astana, Turan st., 15

Tel.: +7- 7172-73-17-27

«CASPI BITUM» LLP

The Republic of Kazakhstan,Aktau, Promzona st.,

Tel. + 7- 7292- 42-41-02

Annual report of “KazMunayGas Refinery and Marketing ... · Director at "KazTransOil" JSC,...

Documents

Transcript of Annual report of “KazMunayGas Refinery and Marketing ... · Director at "KazTransOil" JSC,...