Production | Our business | The Company | "KazMunaiGas" Exploration Production

The core production assets of the Company consist of two main divisions: Uzenmunaigas (UMG) and Embamunaigas (UMG). UMG accounted for more than 75% of reserves and 70% of the 2009 production level. Following strong production growth in 2000-2005, oil output of the existing fields is currently maintained at an optimal level. Production and cost optimization initiatives are being implemented. Production enhancement technologies are applied.

With regard to UMG and EMG, the Company’s strategy is to maintain existing production levels in the forthcoming years by drilling and completing new wells, performing well work-overs and enhancing oil recovery by implementing new technologies.

The Company also intends to focus on the improvement of efficiencies by continuing to reduce operating costs and rationalizing its operations across the board. This will be achieved through cost optimization, new technologies and by bringing the Companys operations in line with international standards.

KMG EP’s core production operations take place across 41 fields at Uzen and Emba in Western Kazakhstan. One of the main tasks for the core assets is to maintain production levels by optimizing oil production and using new technology to maintain production level.

General economic difficulties and an acute lack of investment in the early to mid 1990s led to significant falls in production levels at the major oil-producing assets of KMG EP. However, towards the end of the 1990s the Company managed to halt the decline in production and then to ensure impressive production growth.

Production has risen by a total of 80% from 1998 to 2006. Enhanced investment in new drilling and more efficient recovery from existing fields has restored production levels. A major role in the recovery process was played by well workovers and the use of modern technologies such as hydro-fracturing. The Company’s strategy now is to maintain production from existing assets at the current optimal level for the next few years.

Kazgermunai was formed in 1993 with a view to attracting investment into the Republic of Kazakhstan from Germany. Under Kazgermunai’s Foundation Agreement, it was granted exclusive rights and licences for exploration and production at the Akshabulak, Nuraly and Aksai fields for a period of 30 years, expiring on 1 March 2024.

Kazgermunai currently operates the Akshabulak, Nuraly and Aksai oil fields. In total, Kazgermunai’s oil fields cover a territory of 897 km2. As at 31 December 2009, their proved plus probable reserves were 26 million tonnes (201 million barrels) of oil.

In 2009, Kazgermunai produced 3.2 million tonnes (67.5 kbopd) of crude oil (which represented a 2% increase compared to 2008 production of 3.14 million tonnes (66.1 kbopd).

CITIC Canada Petroleum Limited (formerly Nations Energy Company Ltd) was formed in 1996 as a private Canadian company to pursue international oil and gas E&P projects around the world. In 1997, Nations Energy acquired 94.62% of the share capital representing 100% of voting control of JSC ‘‘Karazhanbasmunai’’ from the Government of Kazakhstan. JSC Karazhanbasmunai holds 100% of the mineral rights until June 2020 to develop the Karazhanbas oil and gas field in the western part of Kazakhstan which, according to the company, has proved reserves of about 76 mmt (510 million barrels ) as of the end of 2009. In 2009 JSC Karazhanbasmunai produced approximately 1.9 mmt (34 kbopd) of crude oil.

PetroKazakhstan Inc. (PKI)

The PetroKazakhstan Inc. group of companies is involved in hydrocarbon exploration and production as well as in the sale of oil and petroleum products. PKI has a share in 16 fields, 11 of which are in various stages of development. In 2009 PKI produced 6,3 thousand tonnes of oil (134kbopd).