annual report of “kazmunaygas refinery and marketing ... · director at "kaztransoil"...
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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.
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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.
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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
Within this strategic direction, the "KazMunayGas - RM" JSC establishes following strategic goals:
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
Within this strategic direction, the "KazMunayGas - RM" JSC establishes following strategic goals:
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
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"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.
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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
Consolidated financial
statements
Consolidated financial
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).
Completed activities:
- 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
measurement 2012 2013 2014
Oil refining tons 5 037 480 5 010 020 4 925 774
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
Vacuum gasoil tons 123 427 400 005 191 604
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%.
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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.
Completed activities:
- 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.
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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
Oil refining tons 1 045 712 1 038 183 1 126 072
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
Vacuum gasoil tons 145 571 148 307 142 420
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).
Completed activities:
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
Construction bitumen 90/130 thous. tons 13
Construction bitumen 70/100 thous. tons 76
Construction bitumen 100/130 thous. tons 14
Mixture of oil products thous. tons 456 461
Heavy distillate liquid oil thous. tons 220
Completed activities:
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
measurement 2012 2013 2014
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-80 thous.tons 2 2 3
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
RON-95 thous.tons 32 40 43
RON-92 thous.tons 456 508 527
RON-80 thous.tons 153 125 137
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.
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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
Subsidiaries Unit of
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
Subsidiaries Unit of
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.
Subsidiaries Unit of
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.
Subsidiaries Unit of
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
CONSOLIDATED STATEMENT OF FINANCIAL POSITION(continued)
AsofDecember 31, 2014
41
In thousands of tenge Note 2014
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,
anddisplaytheadjustmentsmade. Foradditionalinformation, pleasefindEnclosure 6 attached.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION(continued)
AsofDecember 31, 2014
42
In thousands of tenge Note 2014
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,
anddisplaytheadjustmentsmade. Foradditionalinformation, pleasefindEnclosure 6 attached.
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)
CONSOLIDATED FINANCIAL STANDING REPORT (continued)
As of December 31, 2014
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.
CONSOLIDATED FINANCIAL STANDING REPORT (continued)
As of December 31, 2014
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.
18. OnconclusionofSupplement Agreement№1 dated 21.02.2014 with «KazMunaiGas Onimderi»
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.
21. OnconclusionofSupplement Agreement№1 dated 21.02.2014 with «KazMunaiGas Onimderi»
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
23. OnconclusionofSupplementAgreement №2 with «KazMunaiGas Onimderi» LLP dated
21.02.2014 to the contract № 99-2013//508-2013 dated 02.04.2013,related to the transformation of the
«KazMunaiGas Onimderi» JSC into «KazMunaiGas Onimderi» LLP
24. OnconclusionofSupplementAgreement №1 with «KazMunaiGas Onimderi» LLP dated
21.02.2014 to the contract №527-2013//141-2014 dated 31.12.2013,related to the transformation of the
«KazMunaiGas Onimderi» JSC into «KazMunaiGas Onimderi» LLP
25. OnconclusionofSupplementAgreement №1 with «KazMunaiGas Onimderi» LLP dated
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.
37. OnconclusionofSupplementAgreement№3 with «Atyrau Refinery» LLP dated30.05.2014 to the
contract for a loan №379-2012 dated 13.11.2012.
38. OnconclusionofSupplementAgreement№2 with «Atyrau Refinery» LLP dated30.05.2014 to the
contract for a loan №457-2012 dated 29.12.2012.
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