Program of the NC KazMunaiGaz JSC for the Development of Kazakhstan’s Program of the NC KazMunaiGaz JSC for the Development of Kazakhstan’s Content for 2011-2015 was approved on April 22, 2011. Content for 2011-2015 was approved on April 22, 2011.

To increase the volume of purchases of goods, production of which was aligned in previous years and which are now manufactured in serial production.

To assist domestic commodity producers in setting up production ofnew types of commodities which are currently imported.

To increase Kazakhstan’s content in implementing large oil and gas projects

To set up serviceand machinery-buildingassets

Main goals and objectives of the Program.

Expected results from the implementation of the Program

1111

Increment in production of oil equipment at the plants of the RK by 2015 in comparison with 2010 by 23% or from 28.5 billion tenge to 35 billion tenge

Increment in production of oil equipment at the plants of the RK by 2015 in comparison with 2010 by 23% or from 28.5 billion tenge to 35 billion tenge

2222

Increase of the share of Kazakhstan’s content in purchases of the KMG Group on commodities to 50 % or increase by 1.6 from 242 billion tenge to 387 billion tenge

Increase of the share of Kazakhstan’s content in purchases of the KMG Group on commodities to 50 % or increase by 1.6 from 242 billion tenge to 387 billion tenge

3333

Increase of the share of Kazakhstan’s content in purchases of the KMG Group on work to 90 % or increase by 1.3 from 565 billion tenge to 74 billion tenge

Increase of the share of Kazakhstan’s content in purchases of the KMG Group on work to 90 % or increase by 1.3 from 565 billion tenge to 74 billion tenge

4444Increase of the share of Kazakhstan’s content in purchases of operators of

large oil and gas projectsIncrease of the share of Kazakhstan’s content in purchases of operators of

large oil and gas projects

5555Establishment of new joint production, service and machinery building assets of the KMGEstablishment of new joint production, service and machinery building assets of the KMG

“Almaty Heavy Engineering Works ” JSC

“Aktyube Oil Equipment Plant” JSC

“KazTurboRemont” JSC

“West Kazakhstan Machinery Building Company” JSC

“Voskhod” LLP

“By-Caspian Machinery Building Complex” LLP

“KSP Steel”LLP

“Format Mash Company” LLP

“Munaymash” JSC

“Petropavl Heavy Engineering Works” JSC

“Plant named after Kirov” JSC

“Tynys” JSC

“Kentau Transformer Producing Plant” JSC

List of individual Kazakhstan’s companies engaged in the Program of the NC KazMunaiGaz JSC (total of 52)

List of individual Kazakhstan’s companies engaged in the Program of the NC KazMunaiGaz JSC (total of 52)

Examples of support of oil and gas machinery building in Kazakhstan“Service Center KazTurboRemont” LLP “Service Center KazTurboRemont” LLP

NC KazMunaiGaz JSC is actively participating in the establishment of Kazakhstan’s plants:Co-financing of the plant through issue of warrants (3 million USD) Provision of long-term orders for complete overhaul, servicing and troubleshooting

NC KazMunaiGaz JSC is actively participating in the establishment of Kazakhstan’s plants:Co-financing of the plant through issue of warrants (3 million USD) Provision of long-term orders for complete overhaul, servicing and troubleshooting

Examples of support of oil and gas machinery building in Kazakhstan

“West Kazakhstan Machinery Building Company” JSC“West Kazakhstan Machinery Building Company” JSC

NC KazMunaiGaz JSC is actively participating in the establishment of Kazakhstan’s plants:Co-financing of the plant through issue of warrants (3 million USD)Provision of long-term orders for complete overhaul, servicing and troubleshooting

NC KazMunaiGaz JSC is actively participating in the establishment of Kazakhstan’s plants:Co-financing of the plant through issue of warrants (3 million USD)Provision of long-term orders for complete overhaul, servicing and troubleshooting

List of long-term agreements concluded between the Group of NC KazMunaiGaz JSC and domestic commodity producers in 2010

List of long-term agreements concluded between the Group of NC KazMunaiGaz JSC and domestic commodity producers in 2010

Name of KMG Subsidiaries and

Affiliates

Name of the domestic commodity producer

Duration of the agreement,

years

Subject of the Agreement

Amount of the Agreement, millions in

tenge

KazMunaiGaz Ep JSC

“Munaymash” JSC 2012 -2015Sucker-rod depth

pumps8 000

“Intergas Central Asia” JSC

“West Kazakhstan Machinery Building Company” JSC

2010-2012 Maintenance of gas

compressor units

2 138

“Service Center KazTurbopRemont” LLP

2010-2013 3 342,1

“KazNefteGasProm” LLP 2010-2013Overhaul of MMC type 10GK at ABAC UGS

Akyrtobe1 300,5

“Atyrau Oil Refinery” LLP

“Pavlodar Heavy Engineering Factory” JSC

2011-2013 Air-cooling unit sections 134,3

Total 14 915

Long-term agreements planned to be concluded for 2011-2015 with domestic Long-term agreements planned to be concluded for 2011-2015 with domestic commodity producers (53,6 billion tenge)commodity producers (53,6 billion tenge)

Name of KMG Subsidiaries and Affiliates

2011 2012 2013 2014 2015Total

KazMunaiGaz EP JSC 7 779 8 019 8 243 8 499 32 540

KazTransOil JSC 1 356 1 357 1 357 4 070

KazTransGaz Group 1 598 3 393 3 981 3 937 4 117 17 026

Total 1 598 12 528 13 357 13 537 12 616 53 636

millions in tenge

KazTransOil JSC has submitted the long-term procurement plan for 2011-2014 which has been approved by the decision of the Management of NC KazMunaiGaz JSC. Currently, long-term agreements with domestic commodity producers are to be signed.

“KazMunaiGaz EP” JSC – currently, a production plan is under way for 2011-2015 and after it is approved a long term procurement plan will be signed and submitted to the Management of the NC KazMunaiGaz JSC and the Company. Further in July-August of this year open tenders will be declared among domestic producers with long-term agreements signed for 2012-2015

KazTransGaz Group – long-term purchase plan is planned to be submitted to the Management of the NC KMG JSC in July 2011.

Kazakhstan’s content in procurement of KazMunayGaz JSC

• Kazakhstan’s content in procurement of KMG Group in 2010, plan for 2011 and fact for first half of 2011

Years

Goods Work Services

Total amount in

billion

tenge

Kaz. content,

% Amount in

billion tenge

Kaz. content

, %

Amount in billion tenge

Kaz. content,

%

Amount in billion

tenge

Kaz. content,

%

2010 (fact) 608 36 396 56 434 72 1 438 52

2011 (fact) 735 40 320 60 400 75 1 455 55

1 half of 2011

(fact)725 40 189 66 300 57 1 214 48

Note: volume of commodity procurement includes purchase of Russian oil to be processed at the “Pavlodar Petrochemical Plant” JSC

Note: volume of commodity procurement includes purchase of Russian oil to be processed at the “Pavlodar Petrochemical Plant” JSC

22.04.23 04:24

According to the purchase plans for 2011, it is being planned to purchase goods, work and services in a full amount of 1,455 billion tenge, whereas it is being planned to reach the 55% index of Kazakhstan’s content from the total volume.

In the first half of 2011 the KMG Group purchased goods, work and services for 1,214 billion tenge with Kazakhstan’s content amounting to 48%. The volume of goods purchased amounts to 725 billion tenge with Kazakhstan’s content in commodities amounting to 40 %.

Purchased work amounts to 189 billion tenge – Kazakhstan’s content in work comprises 66%.

The volume of services purchased amounts to 300 billion tenge with Kazakhstan’s content in services amounting to 57%.

It is noteworthy that purchases of Russian oil to be processed at the “Pavlodar Petrochemical Plant” JSC constitute a significant portion of the volume of goods purchased, which significantly forces down the index of Kazakhstan’s content in purchases of the KMG Group. In 2011 – contracts for purchase of Russian oil have been signed for the amount of 334 billion tenge.

Kazakhstan’s content in purchases of the NC KazMunaiGaz JSC

Challenging issues of Kazakhstan’s content and ways of solving them

Suppliers of oil, gas, gas condensate, electricity, water and other types of commodities obtained from the subsoil of Kazakhstan or produced within Kazakhstan do not have CT-KZ certificates and thus Kazakhstan’s content for the product supplied by them amounts to zero.Notably, these types of commodities occupy a significant place within the structure of procurement of the KMG Group. If domestic suppliers of these types of commodities submitted CT-KZ certificates, Kazakhstan’s content in purchases of the KMG Group would increase from 51 to 6 % based on the results of 2010 .

It is necessary to revisit the existing methods and introduce necessary changes based on which those types of commodities obtained from the subsoil of Kazakhstan or produced within Kazakhstan shall be considered 100 % domestic (Kazakhstan’s) even in the absence of CT-KZ certificates; moreover, commodities with a sufficient degree of refinement shall also be considered as domestic.Relevant proposals have been submitted to the MINT of the RK and currently a new methodology of calculation of Kazakhstan’s content is being developed in light of these proposals.

Challenge

Ways of solutions