Astana - November 2008 “Break Through Projects of the National Company “KazMunayGas”

Astana - NovemberAstana - November 2008 2008

““Break Through Projects Break Through Projects

of the National Companyof the National Company

““KazKazMunayMunayGasGas””

JSC National Company “KazKazMunayMunayGasGas”

“Beineu-Bozoi-Akbulak” Main Gas Pipeline


Due to the absence of gas transportation mains between the bulk consumers of natural gas in the south of the country and the major gas producing regions in the west of Kazakhstan, the country’s south, through the historically formed infrastructure, is supplied by gas from Uzbekistan.

The construction оf the “Beineu-Bozoi-Akbulak” gas pipeline will allow solving the following tasks:

To ensure gas supply from the major gas producing regions in the west of Kazakhstan to the southern regions

To decrease dependence on gas import To solve the problems of gas supply of the communities located along the gas

pipeline route

Project of construction of the “Beineu-Bozoi-Akbulak” main gas pipeline is being implemented in accordance with the Message of the Head of the State N.Nazarbayev to the people of Kazakhstan оf 6th February 2008 with a view of meeting the needs of the southern regions of the republic in gas, elimination of dependence on import gas and maintenance of the country’s energy security.

Project goalProject goal

“Beineu-Bozoi-Akbulak Main Gas Pipeline”


Provide the southern regions of the republic with domestic gas Resolve the issues of gas supply to the localities situated along the route of the gas

pipeline Ensure gas supplies for steady operations of the Zhambyl SDPP (State District Power Plant) Normalize prices and supply volumes of gas to consumer

Length: 1510 km

Construction of the I line

(throughput capacity 5 bln. m3

per year):

June 2009 – June 2011

Construction of the II line

(throughput capacity 10 bln.

m3 per year):

2013 – December 2014


BeineuBeineu

BozoiBozoi

AkbulakAkbulak

Beineu-Bozoi-Akbulak main gas pipeline route


Basic indicesBasic indices

Name Measurement unit 1st stage 2nd stage

Length km 1510

Pipe size mm1016 mm - 1480 km

711 mm - 30 km

Work pressure MPa 9,81

Throughput bln.m3/y 5 10

Number of compressor stations

unit 2 3

Implementation period years 2009-2011 2013-2014

Construction cost mln.$ 3 441,2 386,9



Economic and social benefitsEconomic and social benefits


Improvement of gas supply of the country’s southern oblasts.

Decrease in the volumes of gas import.

Construction of infrastructure facilities along the gas pipeline route.

Growth of the population’s employment – number of personnel for running of the pipeline will make 500 persons.

Possibility of export of Kazakhstan gas to China by the “Kazakhstan – China” gas pipeline.

Growth of Kazakhstan’s revenues from taxes and assessments to budget.


“First Integrated Gas-and-Chemical Complex in Atyrau Oblast”


General Data of the ProjectGeneral Data of the Project


Goal: processing of the hydrocarbon gas of the Теngiz field, increase in the added value оf the produced hydrocarbons.

Contractor of the project: LLP Kazakhstan Petrochemical Industries Inc. (hereinafter – LLP KPI Inc.), the participatory interest of KMG Exploration Production JSC (hereinafter – KMG EP) – 50%, LyondellBasell – 25%, JSC SAT&Company – 25% Feedstock: petroleum gas of the Tengiz deposit – 7.0 bln.m3

Products: 800 thousand tons/year of polyethylene, 450 thousand tons/year of polypropylene

Location: Karabatan station in Atyrau oblast Completion date: 2013 year Payback period: 4.75 years Total cost: 6.3 bln. USD (equity – 1.89 bln. USD, debt funds – 4.41 bln. USD). Financial adviser – HSBC Bank, UK. Legal adviser – White & Case, UK. PMC (Technical adviser) – Foster Wheeler, UK.

http://www.konvels.ru/images/maps/Refinery-midle.jpg


Organizational Breakdown Structure of the Project Organizational Breakdown Structure of the Project


Main Complex Financing, construction, operation: 1. Processing unitsEthane cracking, Propagedehydrogenation, Ethylene propylene polymerization. GPP for disengagement of ethane,2. Internal infrastructure objects Common maintenance objects, Electrical power plants, Pipelines, Infrastructure

Lyondell Basell25%

KMG EP50%

SAT25%

Commercial banks

Export credit agencies (ECAs)

Guarantee of the ECAs

Extension of a direct budget credit in the

amount of 800 mln.USDthrough FSD “Kazyna”

Decree of the RoK'sPresident No.495 of 19

December 2008 “On Establishment of FEA “National Industrial Technology Park”

State support

TCO

Agreement on propane supply 550 thousand tons/year

Agreement on dry gas supply 7 bln.m3/y

Licensors

TurnkeycontractLSTK

License

Agreement

PMC Foster Wheeler

РМСContract

Lyondell Basell

Off-takeAgreement

Project participants (LLP KPI Inc.)

InfrastructureFinancing, construction, operation:Railroad yard, Electrical power plants

gas-turbine electrical power plants,Ethane pipeline, Propane pipeline,Gas pipeline, Sluice, Evaporation fields, Motor and rail roads, Railroad spur, Overhead lines to KEGOC’s line, Construction camp.

Fin

an

cia

l

ag

ree

me

nt

Shareholder's equity 30%-40%

Project Company

Project financing 60%-70%

0,8 bln. USD4,5 bln. USD

Provision of feedstocks delivery guarantee to TCO

Financial adviser: HSBC Bank

Legal adviser: White&Case

Polyolefinstechnology

EPC Contractor(Consortium)

Main Complex Financing, construction, operation: 1. Processing unitsEthane cracking, Propagedehydrogenation, Ethylene propylene polymerization. GPP for disengagement of ethane,2. Internal infrastructure objects Common maintenance objects, Electrical power plants, Pipelines, Infrastructure

Lyondell Basell25%

KMG EP50%

SAT25%

Commercial banks

Export credit agencies (ECAs)

Guarantee of the ECAs

Extension of a direct budget credit in the

amount of 800 mln.USDthrough FSD “Kazyna”

Decree of the RoK'sPresident No.495 of 19

December 2008 “On Establishment of FEA “National Industrial Technology Park”

State support

TCO

Agreement on propane supply 550 thousand tons/year

Agreement on dry gas supply 7 bln.m3/y

Licensors

TurnkeycontractLSTK

License

Agreement

PMC Foster Wheeler

РМСContract

Lyondell Basell

Off-takeAgreement

Project participants (LLP KPI Inc.)

InfrastructureFinancing, construction, operation:Railroad yard, Electrical power plants

gas-turbine electrical power plants,Ethane pipeline, Propane pipeline,Gas pipeline, Sluice, Evaporation fields, Motor and rail roads, Railroad spur, Overhead lines to KEGOC’s line, Construction camp.

Fin

an

cia

l

ag

ree

me

nt

Shareholder's equity 30%-40%

Project Company

Project financing 60%-70%

0,8 bln. USD4,5 bln. USD

Provision of feedstocks delivery guarantee to TCO

Financial adviser: HSBC Bank

Legal adviser: White&Case

Polyolefinstechnology

EPC Contractor(Consortium)


State support of the ProjectState support of the Project


The Decree of the President of the Republic of Kazakhstan “On Establishment of free economic area “National Industrial petrochemical park” No.495 of December 19, 2007 was signed.

The Republican Budget Committee at the tenth meeting approved parameters of the amended republican budget of 2008, including extension of a budget credit in the amount of 10 bln.tenge for 2008, through FSD Kazyna for construction of infrastructural objects of the Project. The draft law “On the Republican Budget for 2009-2011” provides for financing of construction of the Project’s infrastructure at the expense of budget funds in the amount of 717 mln. USD (2008 - 83 mln.$, 2009 and 2010 - 300 mln.$, 2011- 117 mln. $).

For the purposes of state support of implementation of the Project, it is proposed to consider a possibility of extension of a budget credit through JSC “FSW “Samruk – Kazyna” in the amount of 800 mln. USD for financing of construction of infrastructural objects of the Project in the period since 2008 till 2011. Interest rate – no more 3% per year, for the period of 20 years, with grace period of 6 years.

Conclusion of the credit agreement with JSC Development Bank of Kazakhstan and sub-borrower LLP KPI Inc in December 2008 for the amount of 10 bln. tenge (83 mln.$).

АО «Национальная компания «КазМунайГаз»Республика Казахстан,

010000, Астана, пр. Кабанбай батыра, 19тел.: +7 (7172) 97-61-01

факс: +7 (7172) 97-60-00, 97-60-01e-mail: [email protected]

http://www.kmg.kz

Astana - November 2008 “Break Through Projects of the National Company “KazMunayGas”

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