Request for OMG 2015 MET relief denied

Request for Ozenmunaigas 2015 MET relief denied

Astana, 18 January 2016. KazMunaiGas Exploration & Production ("KMG EP" or the "Company") announces that Ozenmunaigas's ("OMG") request to temporarily have Mineral Extraction Tax (MET) relief for 2015, approved for the Uzen and Karamandybas fields in Mangystau Province, has not been approved by the Kazakh Government. In a low oil price environment, the Kazakh Government has the ability to make relief to temporarily reduce the MET on hydrocarbon fields that produce low or no profits. Had the Company been awarded such a relief, a MET rate of 0.65 percent would have applied retrospectively throughout 2015 (as opposed to the current 13-percent MET rate).

The Company has provided the government with all the requisite papers and calculations, including the necessary data for the eleven months of 2015 taking into consideration macroeconomic changes. Given the low oil prices, the Company saw a loss of 49.4 billion tenge (or US$252 million) from its operating activities over the first nine months of 20151. The consolidated profit of 138 billion tenge (or US$703 million) over the said period is largely a result of the foreign exchange benefit from the low tenge. The breakeven point for OMG, as at 30 September 2015, was estimated by the Company to be approximately US$65 per barrel of oil, while the average price per barrel of Brent oil was US$55.30 per barrel. Given the current macroeconomic environment, the breakeven point may vary.

KMG EP Chief Executive Kurmangazy Iskaziyev commented:

"The Company is disappointed that the request for the MET relief for the Uzen and Karamandybas fields for 2015 has not been approved. Under the current circumstances, where OMG employs almost 14,000 people including employees of oilfield service companies, and is the major employer in Zhanaozen, the MET relief would have helped maintain the Company's profitability in these hard times of falling in prices for oil".

Due to the negative oil price dynamics KMG EP will continue to apply for OMG's MET relief for the Uzen and Karamandybas as well as for Embamunaigas fields.

KMG EP has been one of the biggest taxpayers in Kazakhstan since it was established in 2002. Over the first nine months of 2015, the Company has paid 226 billion tenge (US$1.2 billion) to the state budget in the form of taxes and other charges.

Notes to editors

KMG EP is among the top three Kazakh oil producers. The overall production in 2014 was 12.3 million tonnes (250 kbopd) of crude oil, including the Company's share in Kazgermunai, CCEL and PKI. The Company's total consolidated volume of proved and probable reserves including shares in the associates, as at the end of 2014 was 177 million tonnes (1,303 mmbbl), out of which 132 million tonnes (981 mmbbl) relates to Ozenmunaigas, Embamunaigas, and Ural Oil and Gas (Rozhkovskoye field, Fyodorovskiy block). The Company's shares are listed on the Kazakhstan Stock Exchange and the GDRs are listed on The London Stock Exchange. The Company raised over US$2bn in its IPO in September 2006.

For further details please contact us at:

KMG EP. Investor Relations (+7 7172 97 5433)

Asel Kaliyeva

e-mail: [email protected]

KMG EP. Public Relations (+7 7172 97 79 08)

Yelena Pak

e-mail: [email protected]

Brunswick Group (+44 207 404 5959)

Carole Cable

e-mail: [email protected]

Forward-looking statements

This document includes statements that are, or may be deemed to be, ''forward-looking statements''. These forward-looking statements can be identified by the use of forward-looking terminology including, but not limited to, the terms ''believes'', ''estimates'', ''anticipates'', ''expects'', ''intends'', ''may'', ''target'', ''will'', or ''should'' or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They include, but are not limited to, statements regarding the Company's intentions, beliefs and statements of current expectations concerning, amongst other things, the Company's results of operations, financial condition, liquidity, prospects, growth, potential acquisitions, strategies and as to the industries in which the Company operates. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that may or may not occur. Forward-looking statements are not guarantees of future performance and the actual results of the Company's operations, financial condition and liquidity and the development of the country and the industries in which the Company operates may differ materially from those described in, or suggested by, the forward-looking statements contained in this document. The Company does not intend, and does not assume any obligation, to update or revise any forward-looking statements or industry information set out in this document, whether as a result of new information, future events or otherwise. The Company does not make any representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved.