KMG to consolidate all shares in KMG Kashagan B.V. after buying back 50% stake from Samruk-Kazyna

ALMATY. Sept 21 (Interfax) - National Company KazMunayGas JSC (KMG) will consolidate 100% of KMG Kashagan B.V. shares following the purchase of a 50% stake from Samruk-Kazyna JSC, KMG's press service told Interfax.

"Prior to the conclusion of the deal, KMG Kashagan B.V. was owned by Samruk-Kazyna and National Company KazMunayGas JSC, each with a 50% stake. The investment in KMG Kashagan B.V., namely 50% of its shares, has been treated as an investment in the joint venture and recognized in KMG's consolidated financial statements as a participating interest. After buying back 50% of KMG Kashagan B.V. shares from Samruk-Kazyna, KMG will consolidate 100% of KMG Kashagan B.V. shares," the press service said in response to an inquiry from Interfax.

KMG exercised its right under the Share Option Agreement signed in 2015 and acquired a 50% stake in KMG Kashagan B.V. from Samruk-Kazyna on September 15, 2022 for $3.8 billion. KMG Kashagan B.V. owns 16.88% in the North Caspian Production Sharing Agreement, or the Kashagan project.

KMG sold a 50% stake in KMG Kashagan B.V. to Samruk-Kazyna in 2015 to use the proceeds to reduce debt and prevent violation of the financial covenant net debt/EBITDA<=3.5x in KMG Eurobonds after a sharp drop in oil prices at the time.

The 50% stake in KMG Kashagan B.V. was earlier subject to a prejudgment attachment, which was lifted by The Hague Court of Appeal in the Netherlands this year. The subsequent appeal of this decision filed with the Supreme Court of the Netherlands cannot affect the buyback of the 50% stake by KMG as the decision of the Court of Appeal to lift the attachment took immediate effect.

Kashagan is Kazakhstan's first offshore oil and gas field in the Caspian Sea. It is the largest international investment project in the country. The Kashagan field's recoverable resources are estimated at 9-13 billion barrels of crude. Commercial operations at Kashagan began on November 1, 2016.

The North Caspian Operating Company, the operator of the Kashagan project, is owned by KMG Kashagan B.V. at 16.877%, Shell Kazakhstan Development B.V., Total EP Kazakhstan, Agip Caspian Sea B.V., and ExxonMobil Kazakhstan Inc. each at 16.807%, CNPC Kazakhstan B.V. at 8.333%, and Inpex North Caspian Sea Ltd. at 7.563%.

National Wealth Fund Samruk-Kazyna JSC, established in 2008, owns and operates Kazakhstan's strategic assets, including Air Astana, Kazakhtelecom, Kazatomprom, KazMunayGas, KazPost, Kazakhstan Temir Zholy, KEGOC, and others.

The official exchange rate on September 21 is 478.26 tenge/$1.