KazMunaiGas (KMG)

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Type State-owned
Traded as KASE:RDGZ LSE:KMG (KMG EP)
Founded 2002
Headquarters Astana, Kazakhstan
Key people Kiinov Lyazzat Ketebaevich (Chairman)[1]
Employees 70,121 (2011)[2]
Website www.kmg.kz


Global Snapshot

KazMunaiGas (KMG) is 100% owned by the government of Kazakhstan through the national welfare fund Samruk-Kazyna, an entity seen by Reuters as an extension of the government.[3] It is the owner of 44 onshore oil and gas fields in the Mangistau and Atyrau regions of Kazakhstan and in 2011 accounted for 65% of all oil transportation, 100% of gas transportation and 50% of tanker transportation in Kazakhstan.[4] The development strategy of KMG EP up to 2029 set a goal of becoming one of the world's top 20 oil and gas companies.[5]

One of the principal subsidiaries of KMG is KazMunaiGas Exploration and Production (KMG EP), established in 2004 following the merger of Uzenmunaigas JSC (UMG) and Embamunaigas JSC (EMG). The company's shares are listed on the Kazakhstan Stock Exchange (KASE) and its global depositary receipts (GDRs) on the London Stock Exchange (LSE). KMG EP is the Kazakhstan's second largest oil producer, however in 2010 the Board of Directors approved the Company's participation in several projects outside Kazakhstan. These included the 'White Bear' project in the North Sea and a tender to develop the Akkas field in Iraq.[6]

According to an analysis by Reuters KMG had a "highly leveraged" financial profile in 2012, with large debt due to large capital expenditures to upgrade refineries and the Kashagan field, in which it has a 16.8% stake.[7] At the end of 2011 KMG E&P's proven oil reserves (1P) stood at 561 million barrels, with proven plus probably plus possible reserves at 1.96 billion barrels (bbl). Production over the year was 58 million barrels, giving an average daily production of 158,904 barrels per day (bpd).[8]

KMG EP Company Report Highlights

According to the 2010 Annual Report for KMG's Exploration and Production subsidiary[9], production continued to grow in 2010, rising by 16% to around 270,000 barrels of oil per day (bpd).

Over 2010 the reserves replacement ratio at the Uzen and Emba fields was, at 73%, significantly better than in 2009, but still not entirely satisfactory given the depletion of deposits. KMG EP intended to make additional efforts to ensure a higher level of reserves replacement at its core assets in the future. Capital expenditure for 2011 had been approved at US $709 million, and the company was expanding its exploration assets.

2010 was marked by the company's first significant onshore oil discovery at the Liman Block in West Kazakhstan, but the CEO commented that they should not limit their business activities to Kazakhstan alone.

Official Accreditations and Global Perceptions

Transparency

EITI Supporter Status

As of December 2011, KazMunaiGas was not a supporting member of the EITI.

UN Global Compact

As of December 2011, KazMunaiGas was a participant in the UN Global Compact, having joined in 2006.

CSR Review

KMG EP's 2010 Annual Report[10] highlights the following achievements in corporate social responsibility:

  • Total 'Social Expenses' in 2010 were $28 million.
  • In 2008 KMG EP started to allocated $6.1 million annually to its contractual obligations to the Social Infrastructure Development Programme for the town of Zhanaozen aand Karakiya district. Funds are spent on the development of municipal housing, public services and social infrastructure. In addition, the company provided additional financial support of $6.6 million in addition to the company's contractual commitments. These funds were used to create 1000 social jobs in Zhanaozen, a 200-apartment residential building and the expansion of a subsistence farm in Tenirekshin village.
  • The company annually provides sponsorship and charitable assistance in the Atyrau region, including the Ak-Bot Orphanage, the Association of Disabled Persons, city sports organizations and financial assistance to World War II veterans. In 2010 the company spent $0.8 million on these projects.
  • KMG EP allocated $10.7 million in 2010 to the development of a program for improvement of social and living conditions at the subdivision of UMG for 2009-12, to be spent on new dining halls, first aid medical stations etc.
  • In 2010, 4,500 employees improved their level of qualification through participation in seminars, training, certification programs and conferences. The company also publishes the Munaily Meken newspaper, which is distributed to all employees to discuss important social and HR-related problems.

External Coverage

  • During 2011 hundreds of workers at an oil facility controlled by KMG in Zhanaozen, Kazakhstan, proteested for better salaries and working conditions and in the summer almost 1000 workers were fired for striking. The clashes which followed killed at least ten and were reported to be some of the worst unrest to hit the country since it gained independence in 1991.[11]

Global Operations by Country

Iraq

Main article: KazMunaiGas Operations in Iraq

References

  1. Management Board”. KazMunaiGas, retrieved 19 December 2012.
  2. KazMunaiGas: Participant InformationUN Global Compact, retrieved 9 December 2011.
  3. TEXT-S&P summary: JSC NC KazMunayGas”. Reuters, 30 November 2012.
  4. KazMunaiGas O&G Company ex head Kairgeldy Kabyldin appointed head of KazTransOil”. Tengri News, 11 October 2011.
  5. Annual Report 2010”. KazMunaiGas, 25 March 2011.
  6. Annual Report 2010”. KazMunaiGas, 25 March 2011.
  7. TEXT-S&P summary: JSC NC KazMunayGas”. Reuters, 30 November 2012.
  8. v”. Bloomberg, 16 April 2012.
  9. Annual Report 2010”. KazMunaiGas, 25 March 2011.
  10. Annual Report 2010”. KazMunaiGas, 25 March 2011.
  11. Clashes between police and sacked oil workers in Kazakhstan leave 10 dead”. Guardian, 16 December 2011.

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