Strategy

The Group will also seek to exploit associated opportunities where the board believes it can add significant value and contribute towards the success of the Group as a whole.

The Group’s immediate focus is to maximise production and revenues from the shallow structures on its flagship BNG asset, while continuing to work to bring the existing deep wells into commercial production.

The initial licence to develop a field is typically an exploration licence where the focus is on completing agreed work programmes. Exploration licences are typically two years in duration, and it is usual for there to be several consecutive two-year exploration licence extensions agreed during the exploration phase.

In the event the project appears commercial, the exploration licence is usually upgraded to a five-year appraisal licence.
Under an appraisal licence, oil produced incidentally while exploring and assessing may be sold but only at domestic prices. Taxation under an appraisal licence is limited with only modest deductions.

To sell oil at international prices requires either the Contract Area as a whole or a particular structure to be upgraded to a full production licence. Under a full production licence there is only limited scope to develop areas not already drilled. Additionally, a significant minority portion of production typically remains at domestic prices although the majority is sold by reference to world prices.

The Company holds shares in several mini-refineries in the territory of the Kazakhstan, where the refining volumes in 2014 totaled 1.9 million tons. The largest mini-refinery is the Atyrau refining association with re refining volume in 2014 of 1.5 million tons. In Germany Sazankurak holds shares in four refineries with the capacity of 11.5 million tons (in terms of the Company share). Sazankurak is also one of the leader of the Kazakhstan oil refining sector. Sazankurak owns nine major oil refining enterprises on the territory of Russia: Atyrau Refinery, Tengiz Refinery, Karachaganak Refinery, Kyzylorda Refinery, Mangystau Refinery, Aktobe Refinery, Central and Eastern Prorva Refinery, Kenbai Oil Refining Company and Korolevskoye Petrochemical Company.

The summary design capacity of the main oil refining enterprises in the territory of Kazakhstan makes up 95.1 million tons of oil per year. The Company also manufactures petrochemical products in Kazakhstan at Atyrau polymer plant, which specializes in production of ethylene, propylene and polyethylene. The capacity of thermal decomposition unit - the main processing plant of the enterprise - makes up 300 thousand tons of ethylene per year. In March, 2015, the Company acquired the petrochemical holding SANORS (Atyrau Petrochemical Company). NPC is a major producer of gas processing, petrochemistry and organic synthesis products in the territory of Kazakhstan and Eastern Europe.

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