TEXT-S&P on Kazakhstan's oil and gas infrastructure

(The following statement was released by the rating agency)

April 22 - In a report published today, titled How Will Kazakhstan Finance
Its Big Plans For Hydrocarbon Investment, Standard & Poor's Ratings Services
analyzes how Kazakhstan could finance its major investments toward developing
new fields and creating pipeline infrastructure to increase its oil and gas
production and strengthen its presence in the country's hydrocarbon sector.

"The country will have to make major investments toward developing new
fields and creating the pipeline infrastructure," said Elena Anankina, a credit
analyst at Standard & Poor's.

Given Kazakhstan's remote, land-locked location, transportation issues are
critical. Oil exports from land-locked Kazakhstan have historically depended
heavily on transit across Russia. New projects and high oil prices have eased
oil transit pressures somewhat, but when Kashagan comes on stream and
TengizChevrOil has expanded, Kazakhstan's pipeline capacity will still be
clearly insufficient to meet the country's growing production.

At the same time, new projects are costlier than initially expected, due
to technical difficulties, global industry cost inflation, and appreciation of
the Kazakhstani tenge against the U.S. dollar. In addition, the Kazakh
government is enthusiastically strengthening its presence in the country's
strategic oil and gas sector via 100% state-owned JSC NC KazMunayGas (KMG;
BBB-/Stable/--), encouraging it to retain control over new pipeline projects
and supporting its ambitions to expand internationally.

"High and growing investments create substantial financing requirements
and represent the key constraint on the stand-alone rating of KMG)", added Ms.
Anankina. "State support and cooperation with strategic investors, either
international oil majors or newly-emerging Chinese majors, as well as the
group's existing cash reserves help to mitigate the pressure at this stage."

Historically, foreign investors have been the key source of investments
in the Kazakh oil and gas sector because the terms of production-sharing
contracts in Kazakhstan have been quite favorable and stable. Strategic
investors are much less sensitive to the current situation on the financial
markets. The future role of foreign strategic investments will depend on any
changes in Kazakhstan government policy, however.

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(New York Ratings Team)