Pitchbook template

Operational and financial results in 2017

May 2018

S T R I C T L Y P R I V A T E A N D C O N F I D E N T I A L

Disclaimer

2

IMPORTANT: You must read the following before continuing. The following applies to this document, the oral presentation of the information in this document by KazTransGas Joint Stock Company (the “Company”) or any person on behalf of the Company, and any question-and-answer session that follows the oral presentation (collectively, the “Information”). In accessing the Information, you agree to be bound by the following terms and conditions.

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Presenting team

3

Dair Kusherov

CFO

Botagoz Baibatyrova

Head of Corporate

Finance and Treasury Department

Daniyar Arkalyk

Deputy Head of Corporate

Finance and Treasury Department

Almas Sulaimanov

Expert of Corporate Finance

and Treasury Department

Nurzhan Dyussembinov

CFO,

KazTransGas Aimak

Aigolek Mamutova

CFO,

Intergas Central Asia


Primary Energy Consumption (quadrillion Btu)

MARKET OVERVIEW

4

China Demand for Gas (trillion cubic feet)

Shares of Primary Energy Europe Demand for Gas (trillion cubic feet)

0

150

300

450

600

750

900

2012 2020 2025 2030 2035 2040

(quadri

llio

n B

tu)

Oil Gas Coal Nuclear Other

Source:

1. U.S. Energy Information Administration, https://www.eia.gov/outlooks/ieo/ieo_tables.php

2. BP Statistical review of World Energy 2017 http://www.bp.com/content/dam/bp/pdf/energy-economics/energy-outlook-2017/bp-energy-outlook-2017.pdf, p. 14

Notes: (1) Energy consumption comprises commercially-traded fuels, including modern renewables used to generate electricity

0

5

10

15

20

25

30

2012 2020 2025 2030 2035 2040

(tri

llio

n c

ub

ic fe

et)

Gas Consumption Gas production

0

5

10

15

20

25

30

2012 2020 2025 2030 2035 2040

(tri

llio

n c

ub

ic fe

et)

Gas Consumption Gas Production

50%

40%

30%

20%

10%

0%

1965 1975 1985 1995 2005 2015 2025 2035

Nuclear

Renewables(1)

Oil

Gas

Coal

Hydro


KAZAKHSTAN GAS INDUSTRY

5

Kazakhstani Market Total Gas Volumes

Export and Domestic Consumption Volumes

15,1

17,2

2017

26.8 29 32.3

Production

Export Domestic market

91%

29%

27,2

5,1

Import

24,2

4,8

22,3

4,5

Import

KRG

TCOCNPC

Others

KRG

TCO

CNPC

Others

ImportKRG

TCO

CNPC

Others

Kashagan

Import

2015 2016 2017

15,2

13,7 90%

19%

2016

14,37

12,43

21%

92%

2015


Organizational structure

6

Government of the Republic of Kazakhstan (Baa3/BBB-/BBB)

JSC Sovereign Wealth Fund

“Samruk-Kazyna” (100%) (NR/BB+/BBB)

JSC National Company “KazMunayGas” (Baa3/BB-/BBB-)

JSC “KazTransGas” (100%) (Baa3/BB-/BBB-)

Amangeldy Gas (100%)KTG-Aimak

(100%)

KTG-Onimderi

(100%)

Intergas Central Asia

(100%)

JV Asian Gas Pipeline

(50%)

JV Beineu Shymkent Gas

Pipeline

(50%)

Gas and Gas Condensate

ProductionTrade and Gas Operations

Regional Gas Distribution

System

Main pipeline gas

transmissionService Companies

KazRosGas

50% under KTG’s management

National Bank of Kazakhstan (100%)

90.09% 9.91%


KazTransGas operations – Geographical advantage

7

Underground gas storages

Gas fields

Non-gasified Territories

Gasified Territories

Souyz-Orenburg-Novopskov

Capacity: 40,4 bln m3

Operator: ICA

Russian Transit

Chelyabinsk

Central Asia-Center


Operator: ICA

Central Asian Transit and

Export to Russia/Europe

Bukhara-Ural


Operator: ICA

Export to Russia and Uzbekistan

Beineu-Bozoy-Shymkent

Capacity: 10 bln m3

Operator: BSGP

Export to China and

Transportation to South Kazakhstan

Asian Gas Pipeline

Capacity: 50 bln m3

Operator: AGP

Transit and Export to China

BGR-TBA

Capacity: 8 bln m3

Operator: ICA

Export to China and Kyrgyzstan and

Import of Uzbek Gas

Gas processing plants


The export contract with PetroChina was signed for 5 bcm. From October

15 till December 31 exported gas volume was 1 bcm (as of now 2,8 bcm).

Kashagan field produced 2,7 bcm in 2017 vs. 0,2 in 2016. KazTransGas

has a long-term purchase-sale agreement (till 2042) with Kashagan

consortium for 100% produced gas.

AGP gas pipeline Line C throughput capacity reached 20 bcm. Total

Kazakhstan-China pipeline throughput capacity reached 50 bcm

BSGP gas pipeline reached its maximum throughput capacity of 10 bcm

in November 2017.

Increase of ICA domestic gas transportation tariff for 60%, regional

transportation tariffs for 14% and wholesale gas prices for 7%.

KazTransGas at a Glance in 2017

8

Key developments Key Operating Indicators (bln m3)

Key Financial Indicators (US$m)

INDICATOR 2015 2016 2017

Export gas transportation 12.7 13.2 17.7

Domestic gas transportation 14.9 16.5 17.3

International transit 75.0 58.3 65.8

Domestic market sales 11.5 11.8 12.8

Export sales 2.6 4.3 5.0

INDICATOR 2015 2016 2017

Revenue 1 684 1 469 1 784

Net Debt 887 910 1 282

EBITDA 428 443 478

EBITDA Margin 25% 30% 27%

Net Debt/EBITDA (KZT) 3.2x 2.0x 2.7х

Revenue and EBITDA Breakdown by Activities

* Calculated before applying USD conversion

2017 EBITDARevenue

67%

27%

6%

Sales Transportation Other

42%

26%

21%

11%

Export sales Export transportation

Transit Internal market


Gas sales and tariffs

9

KazTransGas Domestic Gas Sales (bln m3) Regulated Tariffs (KZT per 1,000 m3)

KazTransGas Export Volumes (bln m3) Unregulated Tariffs (US$ for 1,000 of m3 per 100 km)

Transport, (excl. VAT) 2015 2016 2017

Domestic Tariffs 1 380 1 380 2 213

Gas storage, per calendar month

(excl. VAT)200 200 281

Regional transportation tariffs 2 288 3 955 4 527

Wholesale gas prices 12 159 13 457 14 635

Gas transportation, (excl. VAT) 2015 2016 2017

Russian tariff 2.0 2.0 2.0

For export (TCO) 3.2 5.0 5.0

For export (КТG) 3.2 5.0 5.0

Russian transit 2.0 2.0 2.0

Сentral Asia transit 1.7 1.7 2.0

2,6

4,35,0

0,0

2,0

4,0

6,0

2015 2016 2017

11,5 11,8

12,8

10,0

11,0

12,0

13,0

14,0

2015 2016 2017


Gas transportation

10

Total Main Transportation Volumes (bln m3) Domestic Gas Transportation (bln m3)

Export Gas Transportation (bln m3) International Transit (bln m3)

2,6 2,65,0

6,6 6,6

6,4

2,84,1

5,40,8

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

16,0

18,0

2015 2016 2017KTG KRG TCO Zhaikmunay

102,8

88,1

100,9

80,0

85,0

90,0

95,0

100,0

105,0

110,0

2015 2016 2017

15,0

16,517,3

10,0

12,0

14,0

16,0

18,0

2015 2016 2017

59,7

41,246,9

15,3

17,118,9

20,0

40,0

60,0

80,0

100,0

2015 2016 2017

ICA AGP


Key financial results: revenue

11

Revenue dynamics and composition (mln. KZT)

501 958

581 757

8 234 11 373 -20 304

111 155 -42 325 11 666

Total 2017 ExportTransportation

DomesticTransportation

TransitTransportation

Export Sales DomesticSales

Other revenue Total 2018

10%

8%

9%

34%

33%

6%

Export Transportation Domestic Transportation

Central Asian Transit Russian Transit

Export Sales Domestic SalesTotal revenues increased by 80 bln tenge or 16% YoY mainly due to:

• increased export volumes by 16%;

• higher export prices in 2017 vs. 2016 (higher Chines export price plus oil price effect);

• increase of ICA domestic tariff for 60%.


Key financial results: cost of sales

12

Cost of sale dynamics and composition (mln. KZT)

348 454

434 793

22 633

54 639 3 261 1 492 -729

782 4 262

Total 2017 Cost of gassold

Transportationcosts

Payroll DD&A Fuel gas andgas loses

Other taxes Other Total 2018

54%

22%

8%

7%

3%2% 4%

Cost of gas sold Transportation costs

Payroll DD&A

Fuel gas and gas loses Other taxes

OtherTotal cost of sales increased by 86 bln tenge or 25% YoY mainly due to:

• increased transportation costs by 140% as we pay transportation fees to our 2 JVs with CNPC (non-consolidated);

• increased cost of gas sold by 11% due to higher purchased volumes of gas (by 11%).


Borrower

(as of 31/12/2017)(1)

Currency of

loanUSD mln Comments

KTG US$ 750 Eurobond

KTG US$ 50 KMG

KTG KZT 115 KMG

ICA KZT 197 EBRD

KTG Aimak KZT 200 EBRD, DBK, EABD

KTG Aimak KZT 41 7.5% Bond

Total US$ 1353

Debt portfolio structure

13

Note(s): (1) FX rate as at 31/12/2017 KZT/US$ of 332.33 used

Debt, Revenue and Costs Breakdown by Currency (as of 31/12/2017)

Revenue Costs

52%48%

USD KZT

Long-term debt maturity profile (USD mln)

47%53%

Debt

129 155

56 56 56

899

0

100

200

300

400

500

600

700

800

900

1 000

2018 2019 2020 2021 2022 LT

59%

41%

80%

20%


CAPEX SUMMARY

14

Capex (KZT bn)

Net Cash From Operations vs Capex (KZT bn)

41 5583

40 26

463 3

3

0

50

100

150

2015 2016 2017

Investment Capex Maintenance Capex Other Capex

84 84

132

80

125106

0

50

100

150

200

2015 2016 2017

Total Capex Net cash from operations


Growth projects

15

Increase of export capacity to China from 5 to 10 bcm Dividend pay-outs from AGP JV with CNPC (50% portion)

• Petro China's demand is 10 bcm of Kazakh gas per year;

• Current capacity for China is 5 bcm per annum;

• 3 additional compressor stations will give additional 5 bcm;

• Investment project cost is $300 mln (launch in 1Q 2019);

• Additional $1 bln in revenues from 2019.

• Loan 100% guaranteed by CNPC will be repaid in 2023;

• Dividends starting from 2020 (based on 2019 results);

• Maximum capacity of 55 bcm per annum will be reached in 2018;

• AGP Financial indicators in 2017: • Transmitted volumes: 38 bcm

• Revenue: $1,801 bln

• Net profit: $827 mln

• EBITDA = $1,295 bln

• EBITDA margin = 72%

174

12498

339311

0

100

200

300

400

2020 2021 2022 2023 2024

(mln

. U

SD

)

181

943

2 000

0

500

1 000

1 500

2 000

2 500

2017 2018 2019

(mln

. U

SD

)

Revenues from export to China

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