New fields launched
goal
As part of the initiative to increase gas production at its operating and exploration assets, the Company put three new gas fields — South Aksay, East Urikhtau, and Rozhkovskoye — into production in 2023.
The new fields in operation will increase gas supplies to the domestic market.
see the Upstream section
Gas condensate field
Start of production: May 2023
With South Aksai put into production, KMG’s joint venture Kazgermunai will additionally supply up to 100 mln m3 of gas per year for the needs of Kyzylorda Region residents.
Oil and gas field
Start of production: December 2023
East Urikhtau is the first field in Kazakhstan to be commercially developed under the improved model contract.
With six production wells currently in operation, there are plans to drill another nine production wells. This is expected to increase oil production to 200 thous. tonnes per year, while also boosting associated gas production to 100 mln m3 per year.
Gas condensate field
Start of production: December 2023
The extracted raw gas will be transported to the gas processing facilities of Zhaikmunai, and the resulting marketable gas will be supplied to domestic market consumers.
When reaching full capacity:
see the Upstream section
Alternative oil export routes
goal
KMG consistently takes steps to develop alternative export routes for Kazakhstan’s oil.
These steps include:
— crude oil supplies to Germany through the Druzhba pipeline;
— crude oil supplies from the Port of Aktau via Azerbaijan to the Baku— Tbilisi—Ceyhan pipeline;
— Kazakhstan—China oil pipeline expansion in partnership with CNPC.
Expansion of maritime operations
In January 2023, to refine maritime operations technology-wise, KMG established a joint venture with Abu Dhabi Ports (ADP) from the UAE and bought two tankers, Taraz and Liwa. The vessels are now actively engaged in transporting Kazakhstan’s oil in the Caspian Sea.
In mid-2023, KMG/ADP’s combined tanker fleet embarked on its first joint venture of carrying Tengiz oil in the open sea.
details, see the Oil Transportation section
Aktau to Baku—Tbilisi—Ceyhan (BTC) route
Shipments of Kazakhstan’s oil via the Aktau—Baku—Tbilisi—Ceyhan (BTC) route commenced in 2023. In November 2022, KMG and Azerbaijan’s SOCAR inked an agreement for the transit of Kazakhstan’s oil via the Port of Aktau and further on via Baku and the Baku—Tbilisi—Ceyhan pipeline.
The oil is transported from the Port of Aktau to Baku on the tankers operated by KMG’s subsidiary Kazmortransflot (KMTF).
Druzhba pipeline
Shipments of Kazakhstan’s oil to Germany (the refinery in Schwedt) via the Atyrau—Samara pipeline and further on via the Druzhba pipeline commenced in February 2023.
The German partners are keen on amplifying oil imports from Kazakhstan to 200 thous. tonnes per month. In December 2023, the current oil supply contract was extended for six months until June 2024, potentially extendable until the year-end.
details, see the Oil Transportation section
Climate agenda: new initiatives
goal
Republic of Kazakhstan’s national goal: carbon neutrality by 2060
KMG pursues a balanced approach to limiting its carbon footprint. As part of its 2022–2031 Development Strategy, the Company sets the following targets:
— 15% reduction in CO2 emissions from the 2019 level;
— At least 10% reduction in carbon intensity and energy intensity of production operations;
— Commissioning of at least 300 MW of renewable energy capacity.
see the Ensuring
Sustainable Development section
On 18 January 2024 in Rome, KMG and Italian Eni S.p.A. signed the Joint Confirmation Agreement on the initiation of the Zhanaozen hybrid power plant construction project.
The project provides for the construction of:
- 77 MW wind power plant
- 50 MW solar power plant
- 120 MW gas power plant
The goal is to secure power supply for KMG’s local production facilities.
This will be the first-of-a-kind hybrid power plant in Kazakhstan.
The preliminary cost estimate for the project is USD 306 mln.
The plant is planned to reach its full capacity by the end of 2025.There will be up to 800 people employed in the construction phase, and up to 80 people in the operation phase.
The construction project meets KMG’s and Eni’s goals of business diversification and decarbonisation, while contributing to a long-term sustainable partnership.
On 1 November 2023, as part of French President Emmanuel Macron’s official visit to Kazakhstan, a Joint Venture Agreement was finalised with Total for the construction of a 1 GW wind power plant. This initiative builds on the Term Sheet entered into by Samruk-Kazyna, KMG, and Total Eren in November 2022.
The 1 GW wind power plant and a 300 MW / 600 MWh electricity storage system will be built in the town of Mirny, Zhambyl Region.
The initiative is a major step towards strengthening Kazakhstan—France bilateral cooperation in power engineering, renewable energy, and green technologies.
see the Ensuring
Sustainable Development section
Maintaining a comfortable leverage
Credit ratings
see the Financial Review section
KMG is a leading borrower in Kazakhstan’s Eurobond market. The Company is the second largest issuer of Eurobonds in Kazakhstan following the nation’s government.
KMG borrows both on the national and global capital markets in line with its flexible and balanced debt management policy. The Company’s bonds are among the most liquid instruments among those offered by Kazakhstan’s issuers. KMG’s Eurobonds have been historically attractive to a wide range of investors.
In April 2023, KMG made a full early redemption of Eurobonds in the amount of USD 500 mln with a coupon rate of 4.75% and maturity date on 24 April 2025.
In 2023, despite significant external economic risks, leading international credit rating agencies upgraded the Company’s credit ratings
- On 9 March 2023, Standard & Poor’s (S&P) affirmed the Company’s rating at BB+, and revised outlook to stable reflecting the agency’s rating action on Kazakhstan (the rating being affirmed at BBB-, with outlook revised to stable).
- On 3 May 2023, S&P updated the likelihood of extraordinary government support from high to very high without changing the Company’s rating.
- Fitch Ratings upgraded KMG’s credit rating on 22 June 2023 from BBB- to BBB with a stable outlook, following an upgrade in its standalone credit profile. This rating aligns with the sovereign rating of the Republic of Kazakhstan.
- On 13 December 2023, Moody’s affirmed KMG’s Baa2 rating, but revised the outlook to positive indicating confidence in the Company’s sustained standalone credit profile. This rating aligns with the sovereign rating of the Republic of Kazakhstan.
- On 26 December 2023, S&P affirmed KMG’s BB+ rating, while upgrading its standalone credit profile from bb-to bb.
see the Financial Review section
Value growth for shareholders
In 2023, the Company paid its shareholders a record KZT 300 bln in dividends, with KMG’s shares adding over 37% in price since the IPO date.
details, see
the Shareholder and Investor Relations section
As of 31 December 2023, the price of KMG shares since the offering date went up by 37.3%. Taking into account the dividends paid, the share price increase as of 31 December 2023 compared to the offering date was 43.1%.
As of the end of 2023, KMG has a market capitalisation of KZT 7.0 tln or USD 15.5 bln.
KMG’s dividend policy is aimed at balancing the interests of shareholders, creditors and the Company, as well as ensuring transparency in determining the amount of dividend payments to its shareholders.
In 2023, KMG’s Annual General Meeting of Shareholders decided on a dividend payout of KZT 300 bln, reflective of the Company’s business performance in 2022. This is a record-breaking amount in our history.
details, see
the Shareholder and Investor Relations section