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JSC KazMunaiGas Exploration Production Morgan Stanley EMEA Conference London April 2010


Important Notice Forward-looking statements This document includes statements that are, or may be deemed to be, ‘‘forward-looking statements’’. These forward-looking statements can be identified by the use of forward-looking terminology, including, but not limited to, the terms ‘‘believes’’, ‘‘estimates’’, ‘‘anticipates’’, ‘‘expects’’, ‘‘intends’’, ‘‘may’’, ‘‘target’’, ‘‘will’’, or ‘‘should’’ or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They include include, but are not limited to to, statements regarding the JSC KazMunaiGas Exploration Production (“Company”) ( Company ) intentions, intentions beliefs and statements of current expectations concerning, amongst other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, strategies and as to the industries in which the Company operates. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that may or may not occur. Forward-looking statements are not guarantees of future performance and the actual results of the Company’s operations, financial condition and liquidity and the development of the country and the industries in which the Company operates may differ materially from those described in, or suggested by, the forward-looking statements contained in this document. The Company does not intend, and does not assume any obligation, to update or revise any forwardlooking statements or industry information set out in this document, whether as a result of new information, future events or otherwise. The Company does not make any representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved. achieved Cautionary Note to US Investors The US SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that the company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. The crude oil reserves of Company within this document have been estimated by Gaffney Gaffney, Cline & Associates (‘‘GCA’’) ( GCA ) according to standards established by the Society of Petroleum Engineers (‘‘SPE’’) and the World Petroleum Congresses (‘‘WPC’’) and thus proved reserves may differ from those estimated according to the definitions of the US SEC. Further, the Company uses certain terms in this document in referring to the Company’s reserves, such as ‘‘probable’’ or ‘‘possible’’ reserves, that the US SEC’s guidelines would prohibit it from including in filings with the US SEC if the Company were subject to reporting requirements under the US Exchange Act. Prospective investors should read ‘‘The Company— Company’s Reserves’’ section in IPO prospectus and the report of GCA, an international oil and gas consultant, on the Company’s reserves, included in this document (the ‘‘GCA Report’’), for more information on the Company’s reserves and the reserves definitions the Company uses.

2


KMG EP Investment Case Ü The largest listed Kazakh oil producer Ü Unique advantages in Kazakhstan based on relationship with the National Company KazMunaiGas (NC KMG) Ü Track record of delivering on strategic goals announced at IPO in 2006 Ü Strong financial position, robust acquisition pipeline and support from NC KMG provide the basis for the future growth Ü Internationally recognised corporate governance system - “The most transparent company in Kazakhstan” (S&P)

Top Kazakh Oil Producers (kbopd, 2009FY)

(1)

16.5% 16.5%

PKI 33%

33%

Source: MEMR; KMG EP production converted using a factor of 7.36 bbl per tonne KGM - 7.7, tonne., 7 7 Karazhanbasmunai - 6.68, 6 68 PKI – 7.75 7 75 others - 7.33 7 33

KMG EP offers a unique investment opportunity in Kazakhstan’s oil sector 3


Strategic Outlook – Focus on Growth of Shareholder Value

International expansion: Turkmenistan, Russia Non-FSU countries

Offshore partnership with ith NC KMG (*)

PKI 33%

CCEL 50%

Main business: onshore upstream p

KGM 50%

EMG UMG

(*) Negotiations with the Government in process

4


Current acquisition targets Kazakhoil Aktobe Sh h ld Shareholders

50% NC KMG, KMG 50% C Caspian i IInvestments t t Resources

Fields

Alibekmola (operated since 2001) Kozhasai (operated since 2003 )

Production

2008: 15 kbopd (0.8 mt) 2009: 19 kbopd (0.9 mt)

Status

Negotiations with NC KMG and full DD completed, awaiting approvals

RUSSIA

Kazakhturkmunai Shareholders

51% NC KMG, 49% TPAO (Turkish National oil company)

Fields

8 oil and gas condensate fields in Aktobe and Mangistau regions

Production

2008: 4.4 kbopd (0.2 mt) 2009: 4.4 kbopd (0.2 mt)

Status

Negotiations with NC KMG and full DD completed, awaiting approvals

KAZAKHSTAN

Astana

Aktobe

Kazakhoil Aktobe, 50% Almaty

Mangistaumunaigas Shareholders

50% NC KMG, 50% CNPC

Fields

2 large fields (Kalamkas, Zhetybai) 13 small fields

Production

2008: 113 kbopd (5.6 mt) 2009: 115 kbopd (5.7 ( mt))

Status

Negotiations with NC KMG in progress

Aktau

Kazakhturkmunai, 51%

KYRGYZSTAN UZBEKISTAN

Mangistaumunaigas g g (50%) ( )

5


Exploration Activity T i Temir

Existing exploration blocks

Taisoigan

R-9 Liman Teresken R-9

Liman Taisoigan

Opportunity to acquire additional blocks Karaton Sarkamys Karaton-Sarkamys

U en Karamand bas Uzen-Karamandybas Karaton-Sarkamys

Uzen Karamandybas Uzen-Karamandybas

Temir Teresken

Exploration is an integral part of our strategy 6


KMG EP Reserves update (EMG and UMG) 1P

2P

3P

Reserves as at 31/12/2008

th. tonnes

95,545

241,180

281,583

Production

th tonnes th.

8 978 8,978

8 978 8,978

8 978 8,978

Adjustment

th. tonnes

1,307

2,213

(2,137)

Reserves as at 31/12/2009

th tonnes th.

87 874 87,874

234 415 234,415

270 468 270,468

1P

2P

3P

Reserves as at 31/12/2008

mmbbl

703

1,775

2,071

Production

mmbbl

66

66

66

Adjustment

mmbbl

10

16

(16)

Reserves as at 31/12/2009

mmbbl

646

1,725

1,989

Source: Gaffney, Cline & Associates

7


Strong Growth in 2P Reserves since IPO year (mmbbl)

377

2,144

32 JVs:

85

79

342

2,200

120

2,133

68

475

1,495 70 Core: 1,725

As at 31/12/2006

(1)

Production Adjustments

KGM and CCEL acquisitions

As at 31/12/2007

Production Adjustments

(1)

As at 31/12/2008

(1)

Production Adjustments

(2)

PKI 33% acquisition

(3)

As at 31/12/2009

Since December 2006 2P reserves up c.50% through exploration, revisions and acquisitions Source: Gaffney, Cline & Associates for KMG EP, KGM, PKI and Miller Lents for CCEL (1) As a result of exploration activity and revisions (2) Per GC&A reserves estimate as at 30 March 2009 (3) Preliminary data as of end of 2009

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Production growth in a volatile price environment Core production kbopd Core production, kbopd 186

186 177

174

171

100 Q109

20,0 , Q209

Q309

Q409

90

Q110

17.0

15,0

70

13.6 12 0 12.0 10.6

80 60

11.5

50

10,0

40

$U US per bbl

million ton nnes

+ 25%

30 5,0

9,3

8,9

9,5

9,5

9,5

9,2

9,0

9,2

20 10

00 0,0

0 2004

2005

Uzen, Emba

2006

KGM - 50%

2007

2008

CCEL - 50%

2009

2010E

PKZ - 33%

Acquisition upside

Targets

(1)

Brent

Source: MEMR, KMG EP data Note: (1) Acquisition upside was calculated based on 2010E for KMGEP and 2009A for current selected acquisition targets (Mangistaumunaigas (50%), Kazakhturkmunai (51%), Kazakhoil Aktobe (50%)).

9


Production costs per bbl(1) 10.7

16

9.6

9.5

14.2

14 12

10.9 9.4

10

10.0

9.6

10.0 9.3

8.5

7.8

10.2

10.0

3Q 2009 3Q 2009

4Q 2009 4Q 2009

8.7

8 6 4 2 0 1Q 2007 1Q 2007 KZT/USD

124.90

2Q 2007 2Q 2007 121.42

3Q 2007 3Q 2007

4Q 2007 4Q 2007

1Q 2008 1Q 2008

2Q 2008 2Q 2008

3Q 2008 3Q 2008

4Q 2008 4Q 2008

123.15

120.75

120.45

120.59

120.00

120.16

Employee benefits

Energy

Materials

1Q 2009 1Q 2009 138.85

2Q 2009 2Q 2009 150.46

150.76

149.80

Repairs & maintenance

Notes: (1) All EMG & UMG costs for labour, materials, repairs, maintenance and electric power including those not directly related to oil production

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Export and domestic sales(1)

2009 Netbacks

Sales volume, th. tonnes

UAS

CPC

Domestic

Average

60 71 60.71

61 02 61.02

n/a

n/a

(Urals)

(CPC blend)

59.26

58.32

17.65

50.06

-

(5.68)

-

(1.28)

Premium of bbl difference(1)

0.09

4.93

-

0.99

Realized price

59.35

57.56

17.65

49.78

Rent tax

7.94

7.29

n/a

6.05

p Transportation

7.32

7.15

1.30

5.96

Sales commission

0.06

0.06

-

0.05

Netback price

44.03

43.07

16.35

37.71

US$/bbl Market quote

2,234 2,119

5,235

2,072

2,020

2,110

1,999

4,947

4,898

2007A

2008A UAS

CPC

2009A

Sales price Quality bank

Domestic Notes: (1) Reconciliation adjustment due to API gravity difference between KMG EP oil and average pipeline mix

Note: (1) EMG & UMG

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Capex budget in 2010(1) • Base B case b budget d tb based d on B Brentt off US$50/bbl

Capex breakdown, US$633m

• Production drilling in 2010 - 201 wells (vs. 95 in 2009)

D Development l td drilling illi

CAPEX

75

• Budget 2010: US$633m (95bn Tenge) on: •

p drilling g - US$267m $ Development

Construction, equipment and other -

53 267

US$238m •

Investment in gas utilization ut at o infrastructure ast uctu e

Investment in gas utilization infrastructure - US$53m

Construction, equipment and other

238 Exploration drilling

Exploration drilling - US$75m

Actual 2009: US$294m (43bn Tenge)

Note: (1) EMG & UMG

12


Financial Performance Net Income

Net Cash(*)

(US$ in billions)

(US$ in billions)

50 5.0

120 97.1

100

4.0 61.7

55.1

60

2.0

2.0 10 1.0

1.0

4,0

80

72.8 66 2 66.2

3.0

50 5,0

1.4

1.3

40

3,0 4,4

2,0

20

0.3

2,6

34 3,4

3,1

1,0

0.0

0 2005

2006

2007

Net Income

2008

2009

Brent, $/bbl

Amounts translated into USD from Tenge at average KZT/US$ exchange period: 2005 at 132.88,, 2006 at 126.09,, 2007 at 122.55,, 2008 rate for the p at 120.29 and 2009 at 147.50

0,0

01 0,1 2005

2006

2007

2008

2009

Amounts translated into USD from Tenge at KZT/US$ exchange rate as of the last date for the p period: 2005 at 133.77,, 2006 at 127.0,, 2007 at 120.30,, 2008 at 120.77and 2009 at 148.36 (*) Cash, cash equivalents and financial assets net of borrowings, end of period

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Strong financial position: allocation of cash on bank deposits Banks, Banks 31 December 2009

Selected potential uses of cash

M&A opportunities t iti :

KKB 30.7% ATF bank 6.8% RBS 6.1% HSBC 4.0% CITI 2.7% CreditSuisse 0 7% 0.7% ING 0.3% Deutsche Bank 0.7%

Halyk Bank 44.2%

BTA 3.8%

~US$4.3bn(*) 24% KZT / 76% USD

X X X X

Kazakhoil Aktobe Kazakhturkmunai Mangistaumunaigas Other

Exploration: X New blocks X Existing blocks

Distributions to shareholders: X dividends • regular (15% (1 % off NI)) • special X stock buy-backs • ordinary • preferred shares

(*) Includes cash, cash equivalents and other financial assets

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Cash Distributions to Shareholders 2007

18 May 2007 (AGM): dividend US$300m, including special dividend US$150m

Preferred shares buy-back program highlights Pref. share count

4.1 million shares(*) (~5.5% of charter capital)

2008

28 May 2008 (AGM): dividend US$344m US$344m, including special dividend US$152m 8 October 2008 (BoD): 12 month buyback programme, US$350m

2009

2010

Listing

Kazakhstan Stock Exchange (KASE)

Start date

9 March 2010

Final date

31 December 2011

Size

About US$500m Up to 10% of equity book value less

28 May 2009 (AGM): dividend US$322m, including special dividend US$80m

26 February 2010 (BoD): listing preferred shares with further buy-back program, up to 100% of issued preferred shares

ordinary shares buy-back costs incurred (according to the law) Mechanism

Series of specialized trades

Price

Market based: Market-based: 9 March 2010 - 21,060.52 KZT/share(*) 10 March 2010 - 21,180.06 KZT/share(*) 9 April 2010 - 21,988.89 KZT/share(*)

(*) There are no GDRs on preferred shares. One ordinary share corresponds to 6 GDRs.

Approximately US$1.8bn of distributions to shareholders approved since IPO 15


Reference Information

Contacts

Share information Total number of ordinary shares GDRs per one ordinary share

70,220,935 6

Corporate website: www.kmgep.kz

Total number of preferred shares

4,136,107

Investor relations e-mail: ir@kmgep.kz

Tickers

Tel: +7 (7172) 975433

LSE

KMG

Reuters

KMGq.L

KASE

RDGZ

Bloomberg

KMG LI

16


Appendix

17


Kazakhstan is one of the world’s largest oil producing countries Proved Oil Reserves: Non-OPEC, bn barrels

Crude oil production growth in 2009 over 2008 Kazakhstan

9.5%

L ti America Latin A i

6 1% 6.1%

Russia and Caspian Sea

North America

Source: BP statistical review 2009 Note: Reserves include gas condensate and natural gas liquids (NGLs) as well as crude oil.

2.7%

2.0%

Other Non-OPEC

-0.6%

OPEC Countries

-5.1%

North Sea

-5.6%

World Total

-1.4%

Source: EIA, EIA Short-Term Short Term Energy Outlook Outlook, January 2010; National Statistical Agency of Kazakhstan Note: Kazakhstan – actual data, Other countries – estimate. Russia and Caspian Sea excluding Kazakhstan

18


KMG EP: a key subsidiary of National Company KazMunaiGas Republic of Kazakhstan

100%

Holding SamrukKazyna

Free float London ((LSE)) Almaty (KASE)

100% National Company KazMunaiGas 37%(1)

63%(1)

KMG EP Сore Assets • UzenMG 100% • EmbaMG 100% Acquisitions since IPO (in 2006) • Kazgermunai 50% (Apr 2007) • Karazhanbasmunai 50% (Dec 2007) • PKI 33% (Dec 2009)

(1)

Mining • Kazakhmys (14.99%) • ENRC (11 (11.65%) 65%) Finance sector • BTA (75.1% ) • Halyk Bank (26.2%) • Kazkommertsbank (21.2%) • Alliance Bank (100%) Other National Companies Upstream • TengizChevroil 20% • Kashagan 16.81%; • KazMunaiTeniz 100% • Kazakhoil-Aktobe 50% • Kazakhturkmunai 51% • Mangistaumunaigas (MMG) 50% Transportation • KazTransOil 100% • KazTransGas 100% • CPC 19%; • KCP 50% Refining, marketing, services • Trade House KMG 100% • Atyrau refinery 99.5% • Shymkent refinery 50% • Pavlodar petrochemical plant 58% • KazRosGas 50% • TenizService 49% • KING (research institute) 90% • Rompetrol 100%

Ordinary shares, excluding treasury shares

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KMG EP: a leading position in Kazakhstan oil sector RUSSIA Legend

KAZAKHSTAN Astana

Atyrau 4.0 (4.9) mtpa

Pavlodar 4.1 4 1 (7 (7.5) 5) mtpa

KMG EP assets

PKI (33%) EMG

Oil pipeline

KCP 155 kbopd

Kyzylorda

UMG

Oil Refinery y 2009 Throughput (Capacity)

KGM (50%) Shymkent 4.0 (7.0) mtpa

BTC

KYRGYZSTAN

UZBEKISTAN

CCEL (50%)

CHINA

(1) Total pipeline capacity

Kazakhstan

Kazakhstan % off the World (1)

KMG EP

KMG EP % off Kazakhstan

Reserves 2008 (bn bbl)

39.8

3.2%

2.1

5.3%

Production 2009 (mt)

76.5

1.9%

11.5

15.0%

Exports 2009 (mt)

68.0

3.5%

9.0

13.2%

Source: BP statistical review 2009; National Statistical Agency of Kazakhstan; KMG EP data Note: (1) Based on 2009 data for Kazakhstan and 2008 world production and export volumes

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2009 vs. 2008: business and financial highlights Ü Average oil price down 36% compared to 2008, KMG EP remained cash flow positive Ü Production – 232 Kbopd(1), 3.8% lower YoY Ü Export sales – 181 Kbopd(1) (79% out of sales), decreased by 1.5% Ü Revenue decreased byy 35% ((20% in KZT)) from US$ $ 5,029m , in 2008 to US$3,291m $ , in 2009 Ü Net income decreased by 29% (13% in KZT) from US$2,006m in 2008 to US$1,422m in 2009 Ü FX gain due to Tenge devaluation – US$607m (2) Ü New tax code effective from 01.01.2009

(1) Including 50% share in Kazgermunai and CCEL (Karazhanbasmunai) (2) Calculated from Tenge amount of KZT89.5 bn. at the exchange rate of 147.5 KZT/USD

21


Financial Summary of KMG EP US$m , or as indicated

2007

2008

2009

Production (kbopd) (1)

192

190

181

3,974

5,029

3,291

(1,720)

(2,470)

(2,241)

24.5

35.4

34.0

9.5

10.7

9.6

8.16

9.4

9.5

Total revenue Operating expenses OPEX per bbl produced, including - Energy, E materials, t i l payroll, ll repairs i and d other th services i -Transportation, taxes, management fees, fines and penalties, other -Export duty / Rent tax

-

8.2

6.0

-Royalty / MET

2.1

3.0

5.7

- DD&A

4.0

4.1

3.2

2,253

2,559

1,050

115

357

902

(66)

(6)

607

142

479

(17)

(1,228)

(1,389)

(514)

48%

41%

30%

52%

53%

56%

Profit for the period (net income) from continuing ops

1,282

2,006

1,422

Cash flows from operations

1,411

1,362

1,011

Capex

(327)

(348)

(294)

g rates Exchange

122.5

120.29

147.5

Operating profit Finance (expense) income including foreign exchange gain (loss)

Share of results of associates Income tax (expense) adjusted effective income tax rate adjusted tax take

(1) (2) (3)

(2)

(3)

Production excluding shares of associates Calculated as income tax expense divided by profit before tax net of foreign exchange effect Calculated as all taxes divided by profit before all taxes net of foreign exchange effect

22


New Tax Code in 2009: Summary of Changes X

X

Tax Code is enacted from 1 January 2009 •

“Tax stability” for pre-2004 contracts abandoned; unified tax regime for almost all subsoil contracts

Rent tax replaced the Export duty(1)

Mi Mineral lE Extraction t ti T Tax replaced l dR Royalty lt

Excess profit tax (EPT) – tax base and rates changed

C Corporate t income i ttax (CIT) rate t reduced d d from f 30% to t 20%(2)

Under discussion •

Tax regime for low profitable fields

(1) January 2009 shipments declared in December 2008 may be subject to double taxation. The company is appealing the claim of customs authorities in courts. (2) Amendments to the Law were approved in November 2009, initial plan was to have CIT decreased to 17.5% in 2011 and to 15% in 2012. Recently, 20% CIT was fixed till 2012

23


Tax regime in Kazakhstan ̇ ̇ ̇ ̇ ̇

Tax take(1), FY 2009

New Tax Code from 2009; transparent tax system, same for all oilfields with very few exceptions

Rosneft

77%

T t l Total

Adequate tax burden, significant exposure to the oil price upside Profitability remains positive in low oil price environment No time lag between oil price and taxation Domestic sales are not penalised by excessive taxation based on world price

75%

Chevron

71%

PTT EP

59%

Petrochina

57%

KMG EP

56%

BP

42% 0%

20%

40%

60%

80%

100%

(1) Estimated from publicly available data, calculated as all taxes as a percentage of profit before all taxes net of FOREX effect for KMG EP

24


Tax Regime Under the New Tax Code (US$/bbl) Estimated tax take at different oil prices based on 2009 cost structure

Tax burden ($//bbl) T

80.00

72 8 72.8 59.4

60.00

Rent tax

46 2 46.2 40.00

33.5 MET

20 9 20.9 20.00

Other taxes EPT

14.7 8.4

CIT

0.00 $40/bbl

$50/bbl

$60/bbl

$80/bbl

$100/bbl

$120/bbl

$140/bbl

Oil price ($/bbl)

Note: Estimated tax take for barrel of exported p oil. Calculations based on varying y g oil p prices and 2009 EMG & UMG cost structure excluding g nonoperating income/expenses and unusual/extraordinary items.

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