BMI's Executive Summary

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The latest Kazakhstan Oil & Gas Report from BMI forecasts that the country will account for 5.13% of Central and Eastern European (CEE) regional oil demand by 2011, while providing 15.77% of supply. CEE regional oil demand rose to an estimated 5.21mn barrels per day (b/d) last year and should average 5.35mn b/d in 2007, before reaching 5.97mn b/d by 2011. Production of an estimated 12.41mn b/d last year is forecast to reach 15.22mn b/d by 2011. CEE gas consumption in 2006 was an estimated 587bn cubic metres (bcm), with demand of 715bcm targeted for 2011. Production last year of an estimated 680bcm should reach 758bcm by the end of the period. Kazakhstan's share of consumption in 2006 was an estimated 3.24%, while its share of production was 4.41%. By 2011, its share of demand is forecast to be 5.03%, with the country accounting for 7.92% of supply.

For the whole of last year, our estimates of average crude oil prices are US$61.10 for the OPEC basket, US$65.10 for Brent, US$66.20 per barrel (/bbl) for WTI and US$61.30 for Urals. For the first quarter of this year, we have adjusted our forecasts to reflect the weather-induced volatility. The OPEC basket is now expected to have averaged US$54.30/bbl, with Brent at US$57.60; WTI averaging US$58.70 and Urals at US$54.00/bbl. Our projections for 2007 as a whole are barely changed from the last quarterly report. We are still assuming an OPEC basket price average of US$55/bbl. Based on last year's typical price differentials, this implies Brent at US$58.80, WTI averaging US$59.90/bbl, and Urals at US$55.30/bbl.

Kazakhstan's real GDP growth is forecast by BMI at 8.8% for 2007, down from 9.9% in 2006. We are assuming 9.1% growth in 2008, followed by 9.3% in 2009, 9.7% in 2010 and 10.0% in 2011. Consumption growth should accelerate with the improving economy, but is unlikely to have much negative impact on export potential. We are forecasting domestic oil demand reaching 306,000b/d by 2011.

State-owned KazMunaiGaz accounts for 12% of oil production and participates in joint venture (JV) projects with international oil companies (IOCs), which should deliver rapid volume growth after the Karachaganak field builds up to full output in excess of 200,000b/d. Expansion of the Tengiz field and activation of the offshore Kashagan project are due to take place later in the decade, and these should push Kazakh production towards 2.40mn b/d by 2011. This implies that oil exports should rise from an estimated 1.11mn b/d last year to at least 2.09mn b/d by the end of the forecast period.

In the BMI Business Environment Ranking matrix, Kazakhstan receives an appreciably lower composite score of 40, which now ranks the country second out of 12 states included in the CEE region. The Caspian state's long-term political risk outlook explains the lower score and ranking. The country's overall business environment can still be considered very attractive in a regional context, thanks largely to a low level of perceived economic, high levels of oil and gas output growth potential, substantial untapped resources, a healthy competitive framework and better-than-average licensing/production sharing terms.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - Regional Market Overview

Central/Eastern Europe Region

Table Central/Eastern Europe Oil Consumption (000b/d)

Table Central/Eastern Europe Oil Production (000b/d)

TableCentral/Eastern Europe Oil Refining Capacity (000b/d)

Table Central/Eastern Europe Gas Consumption (bcm)

Table Central/Eastern Europe Gas Production (bcm)

Table Central/Eastern Europe LNG Exports/(Imports) (bcm)

Kazakhstan

Chapter 3 - Business Environment Rankings

Kazakhstan

Central/Eastern Europe Region

Chapter 4 - Kazakhstan Business Environment Ranking

Economics – Long-term Risk

Politics – Long-term Risk

Oil & Gas Growth

Oil/Gas Reserves

Licensing/Regulation

Competitive Environment

Political Risk Summary

Economic Risk Summary

Business Environment Risk Summary

Chapter 5 - Oil Market Outlook

Table Crude Price Forecasts 2006

Revised Forecasts

Table Oil Price Forecasts

Chapter 6 - Regional Supply and Demand

Central/Eastern Europe

Table: Oil Production (000b/d) – Central/Eastern Europe

Table: Oil Consumption (000b/d) – Central/Eastern Europe

Chapter 7 - Global Picture

Table: Global Oil Consumption (000b/d)

Table: Global Oil Production (000b/d)

Chapter 8 - Industry Forecast Scenario

Oil and Gas Reserves

Oil Supply and Demand

Gas Supply and Demand

Refining and Oil Products Trade

Revenues/Import Costs

Table: Kazakhstan Oil & Gas – Historic Data & Forecasts

Other Energy

Table: Kazakhstan Other Energy – Historic Data & Forecasts

Key Risks to BMI’s Forecast Scenario

Chapter 9 - Economic Outlook

Table: Kazakhstan: Macroeconomic Data And Forecasts

Chapter 10 - Country Snapshot: Kazakhstan Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 11 - Regional Case Study

Emerging Player

Table: Lukoil Investment*

Chapter 12 - Competitive Landscape

Executive Summary

Table: Key Players – Kazakhstan Oil & Gas sector

Overview/State Role

Eni – Summary

Table: Key Upstream Players

Chevron – Summary

BG – Summary

ExxonMobil – Summary

Shell – Summary

Table: Key Downstream Players

KNOC – Summary

ConocoPhillips - Summary

Lukoil – Summary

BP – Summary

CNPC/PKZ – Summary

Total – Summary

Nelson Resources – Summary

Rosneft – Summary

Others – Summary

Chapter 13 - Company Monitor

KazMunaiGaz

Chevron

Eni Kazakhstan

BG Kazakhstan

ExxonMobil Kazakhstan

Shell Kazakhstan

Lukoil Kazakhstan

PetroKazakhstan

Chapter 14 - BMI Forecast Modelling

How we generate our industry forecasts

Energy Industry

Cross checks

Sources

Chapter 15 - Appendix: Regional Demographic Data

Wages (ave labour force per annum), US$ PPP

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Network of European Oil & Gas Sources

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BMI's European Oil & Gas Reports are based on an extensive network of multilateral organisations, government departments, oil and gas industry associations, chambers of commerce and company reports. Information sources include: