Development Strategy
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OUR VISION

Embamunaigas JSC is a highly efficient oil and gas Company with majority state interest, meeting the highest safety standards, with highly qualified personnel and a profitable resource base ensuring long-term development.

OUR MISSION

We produce oil and gas in order to ensure stability for employees and efficiency for the shareholder by balancing social and business interests well.

OUR VALUES

Human life is our absolute value. Ensuring the safety of life and health of our employees through the introduction of a safety culture for themselves and their colleagues. An employee who comes to work must return home safe and sound.

Making it through. The Company is committed to achieving the stated results and goals. We value result-motivated employees.

Careful attitude to the motherland and the Company. The Company appreciates the environmentally friendly employees and those taking care of Company’s assets.

Expertise. The Company creates conditions to improve the expertise of its employees. We value employees seeking to acquire new knowledge and create equal conditions for career growth.

Ethics and respect for the individual. The Company is committed to creating a culture of relations based on mutual respect and trust.

Strategic Priorities

The  Board of Directors of Embamunaigas  JSC approved the  Development Concept of the  Company until 2027. The  Concept was developed in accordance with strategic documents of the  Republic of Kazakhstan, including the  Development Strategy of the  Republic of Kazakhstan 2050, the  “Digital Kazakhstan” State Program and the development strategy of KazMunayGas National Company JSC.

The  development concept defines a set of rules and principles that guide the  Company in making decisions and which, in its opinion, define successful development of the  business. This document is the  basis for elaboration of subsequent program documents, forecast financial and economic models (business plans), risk management system, annual budget of the  Company, as well as in formation of the portfolio of the Company’s projects, including investment projects.

According to the Development Concept, the main strategic priorities of the  Company in decision making are as follows:

Profitability
as an essential condition for the existence of the Company.
Social stability
Ensuring the  employment of the Company’s employees through the rational distribution of staff for current and new projects.
Automation of production
Improving performance and occupational safety.
Energy efficiency
When choosing technologies for new and existing projects, the  Company will give priority to the  use of energy efficient technologies.
Environment
Rational use of subsoil and reduction of adverse environmental impact. With the growth of production, the Company is introducing new technologies that reduce the adverse environmental impact.
The implementation of the Development Concept of Embamunaigas JSC will allow the Company to make a significant contribution to the economic development of the region and confidence in the future for a team of many thousands.
Tree of objectives of the strategic projects
Interim Results
for 2018–2019.
Increase of Resource Base:

GPE

1. Geological survey at Emba-5  – works are completed, contract territory transferred to the State

2. Contract 3577 (for the  Karaton pre-salt complex) – under implementation (currently, seismic data dynamic interpretation is underway)

3. Contract 327 “Exploration and production of crude hydrocarbons at the  Taisoigan block”  – under implementation (structural and dynamic interpretation is underway)

Further Exploration

Within the  framework of the  tasks determined by the  Development Strategy of KazMunayGas National Company  JSC and the  Company’s Development Concept, Embamunaigas  JSC successfully carries out systematic work to replenish the  oil and gas resource base by conducting geological prospecting in exploration areas and further exploration of existing fields. In 2019, as a result of comprehensive work in this direction, a significant increase in reserves in the amount of 14.8 mln tonnes was ensured.

According to the results of the year, the remaining recoverable reserves of Embamunaigas  JSC as of 01.01.2020 amounted to 86.2 mln tonnes as compared to 74.3 mln tonnes as of 01.01.2019. In  2019, the  RoK State Commission on Mineral Reserves reapproved and additionally put on the  books oil reserves for the  existing fields S. Nurzhanov, Kenbai (Eastern Moldabek site), Dosmukhambetovskoye, Botakhan and the newly discovered Western Karasor field.

Large-scale 3D CDPM field seismic survey work on the  Taisoigan site, Kyzylkoginskiy region in the  amount of 5,600 sq. km are completed. Processing and interpretation of obtained 3D CDPM data is currently being carried out, based on which promising structures will be prepared for setting up exploration drilling.

Embamunaigas JSC applies modern approaches and technologies for production of remaining oil reserves. One of these technologies is horizontal wells development, which shows higher efficiency than vertical ones. In 2019, 5 horizontal wells were drilled at Emba. 4 currently operate and provide good oil production rates and 1 well is being tested. The Company further plans to drill horizontal wells in highly viscous layers lying at a vertical depth of up to 300 m and annually increase the share of horizontal wells in production drilling.

Operating Efficiency

The  Company continues systematic work to increase efficiency of production activities. The annual plan of organizational and technical measures to fulfill the  planned indicators of oil production was successfully implemented. At the end of 2019, overhaul life has increased.

In 2019, thanks to the  implemented cloud solutions for the project of using special-purpose equipment in real time, Embamunaigas  JSC switched to single fleet management system. Consequently, consumption level of fuels and lubricants were reduced, vehicle metering was automated, accuracy of calculating cost price of expenses was enhanced, losses at production sites were minimized by reducing waiting time of special-purpose equipment for repair work. As of today, the  solutions have been implemented in six units of the company, and integration with existing IT systems has been carried out. As a result of the  project, organizational structure was revised, changes to internal procedures and the accounting system were made, efficiency of using the fleet was increased, IT solutions-based single integrated information environment was created, which allowed solving several problems at one stroke: ensure transparency of management, control and accounting processes; reduce time for preparing regulatory and management reporting, increase data reliability and minimize human factor impact.

Utilization of Associated Gas

By commissioning of the  associated petroleum gas treatment unit of the Prorva group of fields, the Company significantly reduced the volume of associated petroleum gas burned.

Strategic Indicators

KPI UoM 2018 (ACTUAL) 2019 (PLAN) 2019 (ACTUAL) 2020 (PLAN) 2022 (PLAN) 2027 (PLAN) 2032 (PLAN)
Reserves mln tonnes 74.30 77.009 86.235 85.820 202.64 184.68 146.24
Production output mln tonnes 2.9 2.9 2.9 2.8 3.99 3.15 11.3
Lifting costs tenge/tonne 23,000.44 26,981.68 24,458.14 30,868.58 - - -
Headcount ppl 4,942 5,222 4,928 5,150 5,100 5,060 -
ROACE % 27% 25% 33% 17% >WACC >WACC >WACC
EBITDA mln USD 337.7 376.8 430.8 265.6 384.1 248.3 1,840.7
EVA mln USD 139,21 103,1 172,8 42.8 >0 >0 >0

Key Risks

In order to manage risks, the Company has developed and approved risk management documents and procedures. The Company identified the following key risks in implementing the Development Concept and risk mitigation measures:

No. Factors Potential impact Mitigation measures
1 Decreased production at fields that are in the final stages of development due to the high cost of production Reduced production volumes Increased reserves due to exploration operations and M&A transactions
2 The high level of geological risks due to the depth of the promising layers of the pre-salt Karaton project Decreased Company’s value A strategic partner recruitment
3 Reduced investment potential for financing projects due to the shareholder withdrawing a significant amount of dividends No increase in reserves and production rates The Concept approved by the shareholder (including the investment and dividend policies) as well as business plans for investment projects.
4 Reduced oil prices (below baseline) Reduced Company’s earnings Search for business cost reduction initiatives
5 Negative change in the economic macroparameters of Kazakhstan (KZT-toUSD exchange rate, inflation rate) Reduced Company’s value, increased costs Developed and implemented measures to optimize the Company’s tax policy
6 The risk of unauthorized strikes Break of continuous operation Weighted policy on process outsourcing Prompt implementation of staff retraining programs. Monitoring and analysis of the social climate in the Company