TenizService LLP

Development of marine logistics hub in Kuryk

(for Western Kazakhstan Investment Forum: expanding production and development)

Aktau, 2012 г.

Current situation of cargo turnover in KSCS

1. 12,175 mln of cargo were transshipped in 2011, including dry cargo:₋ metal products : 2,014 mln tones;₋ other cargoes : 322 000 tones;₋ grain: 308 000 tones ₋ Ferry cargoes 1,433 mln tones 2. Volume of cargo turnover in 2011 – 399 bln tenge, what is more up to 16.2% than in 2010. 3. 670,272 mln tones of cargo were transshipped in January-March 2012, what is more up to

20% than the same period in 2011 :3. Planned average annual cargo handling through the "TRACECA" (Zhezkazgan - Beineu) - 19

million tons per year.4. Herewith need for new routes for cargo handling exceeds the existing transport capacity of

RK.

TRACECA

North-SouthCentral route of TAZHM

North route of TAZHM

South route of TAZHM

AktauSeaPort information

In August of current year, RSE «AISCP» transshipped 704 thousand tons of dry and oil-bulk cargo, what came up to 100.7% of the target, including: Oil-bulk cargo – 458 thousand tons; Metal products – 125 thousand tons; Ferry cargoes – 83 thousand tons; Grain – 1 thousand tons; Other cargoes – 38 thousand tons;

Number of ships’ calls – 122. Since the beginning of 2012 «Aktau International Sea Commercial Port» has handled over 7 million 436 thousand tons of dry and oil-bulk cargo, what came to 108.6 % of the target.

Moreover total transshipment of crude oil and oil products came to 5 million 173 thousand tons, dry cargoes 2 262 thousand tons, including transshipment of metal products – 952 thousand tons, other cargoes – 255 thousand tons, grain – 460 thousand tons. The volume of ferry transportations came up to 595 thousand tons. Number of ships’ calls since the beginning of 2012 is 1 268.

12,175 mln of cargo were transshipped in 2011, including Oil-bulk cargo– 8, 032 mln tones, Metal products– 2 ,014 mln tones; Other cargoes– 0,388 mln tones; Grain– 0,308 mln tones; Ferry cargoes– 1 ,433 mln tones.

Prerequisites of offshore logistics hub development

Constant and increasing export and import cargo flows exist between ports of the Pre-Caspian states ports, which requires appropriate development of transport and transshipment facilities by expanding terminals of onshore capacities and by building of new ferryboats;

• Development of cargo flows is largely associated with political interests of nations involved in goods transportation. Ever growing trade and industry ties with China, India and Iran predetermine the progress of the West China – West Europe, the North - South and other corridors. A political understanding with Azerbaijan in place facilitates the Kazakhstan’s own traffic of goods towards ports of the Black Sea, as well as the TRACECA Program implementation. Also, there are other political relationships between countries that intend to have flows of cargoes, which should be considered for further stages to create actual freight traffic;

• In the context of the given circumstances, construction of the Logistics Hub in Kuryk is the republic-wide strategic task to expand cargo flows and to build a state-of-the-art logistics center matching future demands to increase flows of goods in the nearest 15-20 years.

Ersai317,2 ha

216,5 haKuryk 70 km from Aktau;

100 km from airport; 20 km from railway station

220 ha

191,

3 ha

Bautino Akta

u Kuryk

KashaganKalamkas

Convenient and advantageous place; Lack (limitation) of available facilities at

Aktau International Sea Trade Port; No offshore infrastructure to export/import

certain types of goods All-the-year-round operation (navigation); Proximity to main communications lines; Natural depths Safety: the bay is protected against most

strongest winds and waves ( NW direction )

Structure of shipping by types of cargo

Offshore operations support base (OOSB)

Grain terminal

Coal terminal

Oil products terminal

Other cargo

LOGISTICS HUB - KURYK

CIO(Coastal infrastructure objects)

Coal Oil products Other cargoGrainOOSB

Structure of logistics hub

Prerequisites: In connection with the positive results of exploratory drilling on “N“ oilfield,

topicality of implementation of the Project were raised; The beginning of the project at present time will allow to accelerate efficient

and timely development of the block “N“ Absence of this kind of base in Southern part of KSKS.

Proposed solutions: Long-term contracts with N Operating Company for offshore oil operations

support services ; Forward-development of drilling program of N Operating: 2 wells per year

(min).

Project: Offshore operations support base (OOSB)

Investment : 27 mln USD

Number of workplaces: 40 .

Dates: 2013-2015.

Local content: 80%

CIO

Structure of logistics hub

Project: Grain terminal.

Investment: 15 mln USD.

Number of workplaces : 55.

Dates : 2013-2015гг.

Local content: 100%

Prerequisites: Annual export potential ~ 6-8 million tons per year; The existing infrastructure of transportation by railroad is about 3 million tons per year; Current capacities of Aktau Sea Port: 600 000 tons per year; In connection with the development of agricultural production in Kazakhstan, it wre

increased demand for port infrastructure for grain handling; Realization of project will increase the grain export potential of Kazakhstan in the southern

direction, Necessity for additional transportation route. Deficiency of transport / handling facilities is about 1.5 - 3.5 million tones per year.

Proposed solutions:1. Ensuring of guarantee for resource base for grain handling (up to 3 million tones per year);2. Conclusion of contracts with large grain traders to guarantee the Grain Terminal usage; 3. Construction of 20 km railroad near Kuryk.

Coal Oil products Other cargoGRAINOOSB CIO

Structure of logistics hub

Prerequisites: Export potential : up to 30 mln tones/year; Kazakhstan plans to increase coal production by 2015 to 134 million tones by 2020 - up to 151

million tones Aktau sea Port doesn’t transship a coal ; Existing transport capacities are limited due to ban on wagons export outside the Republic of

Kazakhstan in the period July-December of each year; High tariffs of railway transportation; Growing demand for coal in Western and Eastern Europe due to non-use of nuclear power; Omplementation of the project will increase the export potential of mining and metallurgical

industry of Kazakhstan.

Proposed solutions:1. Ensuring of guarantee for resource base for coal handling up to 15 -20 mln tones per year; 2. Conclusion of long term contracts with coal producers to guarantee the Grain Terminal usage; 3. Construction of 20 km railroad near Kuryk.

Project: Coal terminal.

Investment: 34 mln USD.

Number of workplaces: 70.

Dates: 2014-2016гг.

Local content: 100%

COAL Oil products Other cargoGrainOOSB CIO

Structure of logistics hub

Prerequisite: Realization of this project will ensure the stability of the oil products market in Kazakhstan and it will

increase oil export from Kazakhstan. Absence of transport and transshipment outputs by transferring oil products with specialized courts. The dynamics increase of overstocking boiler oil; High rail fair With development of oil production in Kazakhstan as well as demand for import and export of this type

of products there is a need for specialized oil terminals. Realization of this project will ensure the stability of the oil products market in Kazakhstan and it will

increase oil export from Kazakhstan.

Suggested solutions:1. Providing resource base for the transshipment of oil production,2. Entering into a long term contract with petroleum refinery for usage of the terminal3. Construction of the 20 km railroad within the Kuryk area

Уголь Нефтепродукты Другие грузыЗерноБПМО ОБИ

Project: Oil products terminalInvestment: 58 million U.S. dollars.Number of working places: 40.Dates: 2015-2017.Local Content: 100%

Coal OIL PRODUCTS Other cargoGrainOOSB CIO

Structure of logistics hub

Prerequisites: Absence of transport and transshipment outputs by transferring oil products with specialized

courts High rail fare; Positive dynamics of general cargo traffic (per year):

- Sulphur and mineral fertilizers: up to 700 tons- Liquefied gas TCO: up to 500 tons- Food: up to 100 tons- Hardware: Up to 50 tons- Other loads: up to 200 tons

The possibility of reducing the time of transportation; Ability to create a ferry complex

Suggested solutions: Conclusion of a contract for the transportation and handling of sulfur from Tengizshevroil. Conclusion of a contract for the transportation and handling of liquefied natural gas from oil

and gas operators TCO, KPO up to 2-3 million tons per year; Construction of the 20 km railroad within the Kuryk area

Coal Oil products OTHER CARGOGrainOOSB CIO

Project: Other general cargoInvestment: 100 million U.S. dollars.Number of working places: 50 people.Dates: 2012-2015.Local Content: 100%

Prerequisites: In connection with the existing positive results of exploratory drilling on the

block "H", Increasing actuality of building testing area The absence of such a production facility The need for oil and gas operators in the services of testing area Environmental Code of the Republic of Kazakhstan

Suggested solutions: Long-term contracts with N Operating framework for services to support

offshore oil operations; Forward-development drilling program: 2 wells per year. Construction of the 20 km railroad within the Kuryk area

Structure of logistics hub

Coal Oil products Other cargoGrainOOSB CIO

Project: Landfill location and disposal of the waste productsInvestment: 37 million U.S. dollars.Number of working places: 30 people.Dates: 2013, 2015.Local Content: 100%

Structure of logistics hub

Prerequisites: Absence of the environmental response base for oil spill in the southern area of KSCS The proximity of EBR to the perspective oil and gas block «Block H» Environmental Code of the Republic of Kazakhstan (effective from01/09/2007) Recognized international practice: the presence of EBR during the exploration phase. The positive results of exploratory drilling on the block "N"

Suggested solutions: Entering into long term contract with N Operating for providing services in order to

support offshore oil operations. Forward-development drilling program: 2 wells per year Construction of the 20 km railroad within the Kuryk area

Coal Oil products Other cargoGrainOOSB CIO

Project: Environmental Oil Spill Response Base Investment: 80 million U.S. dollars.Number of working places: 65 people.Dates: 2013-2015.Local Content: 100%

Business model of project realization

Investor : OOSB

Investor : grain Terminal

Investor : coal terminal

Investor : oil products terminal

Investor : other cargo

TENIZSERVICEOperator of marine logistics hub

CIO (coastal infrastructure objects)

Quay wall 500 meters

Approach channel

(dredging)

TenizService₋ Design;₋ Со-funding;₋ Construction; ₋ Operator, of logistics hub

20 km Railway– Government operator / owner

Pool of partners and investors

Pool of partners and investors

₋ Ensuring a resource base;

₋ Guarantee usage; ₋ Creation of related

infrastructure

Coal Oil products Other cargoGrainOffshore support

base

Offshore infrastructur

e objects

Благоприятные условия для развития хаба: Строительство ЖД 20 км; Предоставление преференции и

налоговых Льгот ; Гарантийное использование

нефтегазовыми операторами; Финансирование в рамках программы

ПРЕ ИНВЕСТМЕНТ

Project business model

Conclusion

Conclusion: The emergence of alternative export-import route; Implementation of the projects will give a new impetus to the

development of the oil and gas sector, will create capacity for new jobs (350) and to achieve a multiplier effect, which corresponds to the strategic interests of the Republic of Kazakhstan;

Possible risks: Risk of insecurity capacity, transport infrastructure, required

for full operation. Currently there is no approved plan of railway development in

the proposed construction of the ferry complex. Normal functioning of the ferry complex is impossible without sufficient capacity (bandwidth branches and marshalling yard) railway.

Thank you for your attention!