KMG EP Operating Results for the First Quarter of 2018

KMG EP, including its stakes in Kazgermunai (“KGM”), CCEL (“Karazhanbasmunai”) and PetroKazakhstan Inc. (“PKI”), produced 2,898 thousand tonnes of crude oil (238 kbopd) for the first quarter of 2018, at the same level compared to the same period of 2017.

In the first quarter of 2018, Ozenmunaigas JSC (“OMG”) produced 1,350 thousand tonnes (110 kbopd), a 1% increase as compared to the same period of 2017. Embamunaigas JSC (“EMG”) produced 695 thousand tonnes (57 kbopd), which is 1% more than in the same period of 2017. The total oil production volume of OMG and EMG was amounted to 2,046 thousand tonnes (167 kbopd), a 1% increase compared to the same period of 2017.

The Company’s share in production from KGM, CCEL, and PKI for the first quarter of 2018 amounted to 852 thousand tonnes (71 kbopd) of crude oil, which is 3% less than in the same period of 2017. This was mainly driven by the natural decline in oil production at PKI and KGM.

Crude oil supplies and sales of oil products

In the first quarter of 2018, the Company’s combined sales from OMG and EMG were 2,002 thousand tonnes (161 kbopd). Of these crude oil sales, 1,265 thousand tonnes (102 kbopd) were exported and 737 thousand tonnes (59 kbopd) were sold to the domestic market, which is equivalent to 37% of the total sales volume. The share of domestic supplies in the same period of 2017 was 34%.

Out of 737 thousand tonnes (59 kbopd) of crude oil supplied by OMG and EMG to the domestic market in the first quarter of 2018, 535 thousand tonnes (43 kbopd) were supplied to Atyrau Refinery and 202 thousand tonnes (16 kbopd) were supplied to Pavlodar Refinery.

Under the independent oil processing scheme, sales of oil products for the first quarter of 2018 were 669 thousand tonnes, a 5% increase on the same period of 2017. For more details about volumes of sales of oil products please see Table No.2.

The Company’s share in the sales from KGM, CCEL, and PKI was 834 thousand tonnes (69 kbopd) of crude oil. Of this, 318 thousand tonnes (24 kbopd) were exported and 515 thousand tonnes (44 kbopd) supplied to the domestic market, which is equivalent to 62% of the total sales volume. In the same period of 2017, KGM, CCEL and PKI supplied 57% of the total sales volume to the domestic market.

Total 2P reserves of liquid hydrocarbons

The Company’s share in Proved and Probable (2P) reserves of KGM (50% stake), CCEL (50% stake) and PKI (33% stake) as at the end of 2017 was 36 million tonnes (256 million barrels) or 20% of the total consolidated reserves of the Company. As at the end of 2016 the Company’s share in Proved and Probable (2P) reserves of KGM (50% stake), CCEL (50% stake) and PKI (33% stake) was 37 million tonnes (266 million barrels) or 21% of the total consolidated reserves of the Company. The reserves assessment of 2P reserves of joint ventures were made separately by independent auditors[1].

As announced, according to the report by DeGolyer and MacNaughton, 2P reserves of liquid hydrocarbons at OMG, EMG, and Ural Oil and Gas (KMG EP’s share – 50%) fields as at 31 December 2017 excluding the Company’s stakes in KGM, CCEL and PKI were 145 million tonnes (1,065 million barrels).

Thus, the total 2P reserves of liquid hydrocarbons of KMG EP including its stakes in KGM, CCEL, and PKI as at 31 December 2017 amounted to 180 million tonnes (1,321 million barrels).

Table No.1. Production and sales of oil for the first quarter of 2018

	thousand tonnes			kbopd
	3М2017	3М2018	y/y, %	3М2017	3М2018
Oil production volumes
OMG	1 335	1 350	1%	109	110
EMG	691	695	1%	57	57
Total from OMG and EMG	2 026	2 046	1%	166	167
KGM, 50%	346	337	-3%	30	29
CCEL, 50%	261	265	2%	19	20
PKI, 33%	271	250	-8%	23	22
Total from joint ventures	878	852	-3%	72	71
Total oil production	2 904	2 898	-0,2%	238	238
Crude oil sales
OMG and EMG
Uzen-Atyrau-Samara	719	963	34%	58	77
CPC	565	302	-47%	45	24
Export	1 284	1 265	-1%	103	102
Atyrau Refinery	520	535	3%	42	43
Pavlodar Refinery	135	202	50%	11	16
Domestic market	655	737	13%	53	59
Total from OMG and EMG	1 939	2 002	3%	156	161
Export, %	66%	63%
Domestic market, %	34%	37%
KGM (50%)
Export	66	20	-70%	6	2
Domestic market	279	315	13%	24	27
Total from KGM	345	335	-3%	30	29
CCEL (50%)
Export	230	251	9%	17	19
Domestic market[2]	20	–	100%	1	–
Total from CCEL	250	251	-1%	19	19
PKI (33%)
Export	79	47	-41%	7	4
Domestic market	194	200	3%	17	17
Total from PKI	273	247	–10%	24	21
Total from joint ventures
Export	375	318	-15%	30	24
Domestic market	493	515	4%	42	44
Total from joint ventures	868	834	-4%	72	69
Export, %	43%	38%
Domestic market, %	57%	62%

Table No. 2. Production and sales of oil products for the first quarter of 2018

Oil products	Production			Sales
thousand tonnes	Atyrau Refinery	Pavlodar Refinery	Total	Atyrau Refinery	Pavlodar Refinery	Total
92 RON gasoline	65,25	51,73	116,98	56,61	53,26	109,87
95 RON gasoline	6,96	2,94	9,90	4,57	3,20	7,77
98 RON gasoline	–	0,50	0,50	–	0,58	0,58
Diesel fuel	120,30	64,41	184,72	119,50	63,92	183,42
Aviation fuel	1,84	–	1,84	1,46	–	1,46
Total light oil products	194,36	119,58	313,94	182,13	120,97	303,10
Vacuum gas oil	93,82	–	93,82	93,24	–	93,24
Mazut	172,81	34,20	207,01	172,56	29,95	202,51
Bitum	–	1,72	1,72	–	1,72	1,72
Total dark oil products	266,63	35,92	302,55	265,80	31,67	297,47
Liquefied gas	6,40	12,00	18,40	6,40	12,63	19,03
Furnace oil	15,66	–	15,66	16,24	10,54	26,78
Sulfur	0,27	1,49	1,75	0,44	1,38	1,82
Coke	14,08	8,03	22,11	14,85	5,02	19,87
Benzol	1,24	–	1,24	1,36	–	1,36
Others	–	1,10	1,10	–	–	–
Total other oil products	37,65	22,62	60,27	39,28	29,58	68,86
Losses	36,37	22,99	59,35	–	–	–
Total	535,00	201,11	736,11	487,22	182,21	669,43