GLOBAL ATYRAU OIL&GAS
KMGI Record Indicators In 2016
Last year 2016 became one of the most successful based on activities of the KMG International Group of companies, foreign asset of NC KazMunayGas JSC. Unaudited financial EBITDA indicators of KMG International increased 1.5 times and reached 239 mln USD by the end of last year, net profit amounted to 88 mln (net profit from operating activities, in accordance with management reporting, excluding one-time effects on reserves and deferred tax income).
In March, the annual meeting of the management of KMGI Group of companies was held in the city of Sibiu, cultural capital of Romania, where management team announced the financial and operating results of its activities in 2016 to the shareholders. Leaders of the companies-shareholders participated in the meeting: Daniyar Berlibayev from KazMunayGas and Zang Jianjun from CEFC China Energy Limited Company. These results were truly impressive.
Processing and Industrial Services
In the field of oil refining, the implemented projects made it possible to achieve profit in the amount of more than 13 mln USD. By virtue of investments and implementation of the programs, aimed at improvement and development of special activities in Romania, the total volume of raw materials, which were processed in 2016, increased by 9% from 5.45 mln in 2015 to 5.95 mln in the last year.
Petromidia oil refinery in the city of Navodari, the largest oil refinery in Romania and one of the most modern enterprises in the region, have processed more than 5.4 mln tons (15.750 tons/day), which also affected the volumes of produced fuel, amounting to 4.2 mln tons, which is 8% more than in 2015. About 1.9 mln tons of this volume were sold on the local market in Romania (+13%), and the rest was sold on foreign markets (+4%) to subsidiary enterprises of the Group of companies in Moldova, Bulgaria and Georgia, as well as for traditional partners in the Black Sea region.
Vega oil refinery in the city of Ploesti, the oldest enterprise in Romania, which is still operating, increased the volume of processed raw materials by 8% (354,000 tons) while the level of production capacity exploitation equal to 107%. The historical indicators of bitumen (91,000 tons), hexane and organic solvents production were achieved, as well as processing expenses and loses were reduced at the factory.
The Petrochemichals petrochemical facility, the only producer of polymers in Romania, processed 189,000 tons of raw materials (propylene, ethylene), which is the highest indicator for the past 5 years and 8% higher than the volumes, produced in the 2015. 57% of its production was exported, while the Company has developed 3 new types of polymers.
Zang Jianjun
Daniyar Berlibayev
Retail Trading and Sales
The final results in trading increased by 40%, reaching 25 mln USD. In the sphere of retailing, the sales growth in Romania has reached 7% and the amount of total sales in Moldova, Bulgaria and Georgia increased by almost 30%, as compared to 2015.
Sales increase is largely stipulated by implementation of a new commercial policy, as well as continuation of a program on petrol stations network expansion and re-branding of existing Rompetrol petrol stations according to conception, which was implemented in 2013, combing modern needs and expectations of the modern client and the best technical solutions.
The total sales volume of oil products in Romania has reached 2.6 mln tons (+13%), 1.76 mln fuel tons of which (+8%) were sold on the local market through the Rompetrol Downstream, the retail division of KMG International Group of companies. This Company is the largest supplier of oil products to the wholesale market of Romania, which demonstrated sales growth by 11% (1.12 mln tons of fuel) in 2016.
In the sphere of non-fuel sales, the Company managed to achieve the record growth at 21%, increasing sales of related products and services. While the margin of this business amounted to 14.6 mln USD.
As a result of projects implementation in the sphere of marketing, Efix fuel brand, Hei gastro brand and Fill&Go payment system join the ranks of the most popular brands in Romania.
The Group of companies managed to save about 3 mln USD by virtue of a General Service Centre. Thus, the 2016 results prove that the Company has everything to fulfil all the objectives of the “Mission 2020".
On The Way of Large-Scale Changes
Convincing production growth and drastic improvement of the financial and economic situation of the Company became the result of the planned implementation of the Large-Scale Changes Program, which was adopted in KMGI in 2012. During this time a dedicated team was formed turning into reality their success story. Since 2012 the main financial and operating indicators of KMGI grew significantly in actual and monetary terms. The EBITDA operating indicators of the Company increased by 170%, volumes of processed raw materials increased by 49%, volumes of oil products sales in the retail segment by 50%.
"Without exaggeration, last year was the most successful in the history of the Group, owing to establishment of KMG International as a platform for the development of strategic partnerships between KazMunayGas and CEFC China Energy Limited Company in the Black Sea region", commented on the year results the Director-General (CEO) of KMG International Group of companies Zhanat Tusupbekov.
High financial results of KMGI largely caused by implementing a number of programs on improving production processes: productivity development and increasing percentage of light oil in the total volume of final product, reducing operating costs (decrease of thermal energy and electricity consumption) as well as projects within the frameworks of business transformation program, which was initiated in 2013 and named "Change for Good".
Business transformation program was created to improve the effectiveness and development during the period of activities of KMG International Group of companies from 2013 to 2018 related to oil refining, petrochemical activities, procurement of raw materials, retail trading, marketing, geological exploration, production and industrial services. In addition, it aims to reduce operating costs and to increase profitability with a targeted economic effect of approximately 130 mln USD in five years.
The financial effect of the transformation program implementation in 2016 amounted close to 84 mln USD.
Silk Way To Europe
The negotiations with Chinese partners on the Silk Way project were completed at the end of 2016, after which the shareholders signed the necessary documents for registration of the transaction. Under the terms of the agreements, NC KazMunayGas provides oil supply to the KMGI group over 15 years, while CEFC grands the access to the financing equal to 3 bln USD. It is expected that the part of these resources will be directed to the implementation of one of the global projects "One Belt, One Road", initiated by the President of China Xi Jinping.
Currently, discussion of specific projects that will form the basis for further development of the activities of the group in Eastern and Western Europe is continued. At the meetings of the working groups, the projects such as the ERG Total, Saras, as well as the projects in Turkey and Iran are worked through. The transaction, which was implemented in December last year, is uniquely beneficial for both Kazakhstan and China. Partners from the Celestial Empire extend the logistic transportation network on the Great Silk Road and Kazakhstan continues to expand its position on the global market of oil products, and also the country implements privatization program of the assets, which are not strategic for the national Company. As noted by Zhanat Tusupbekov, the CEO of KMGI Group of companies, "this partnership will provide the necessary conditions both in the medium and long term to continue the strategy for the development of special projects in the field of energy, focusing on the economic interests of Kazakhstan, Romania and China.
What is KMG International?
KMG International NV is a 100% foreign asset of Kazakhstani oil and gas company KazMunayGas with 6000 employees in 11 major world markets. After the purchase of the asset in the period from 2007 to 2009, the Company has become the energy bridge between natural resources of Central Asia and European markets.
In Romania, KMG International owns the Petromidia Năvodari, one of the largest and most modern refineries in the Black Sea region with refining capacity of 5 mln tons per year, as well as Vega Ploiesti refinery and the only manufacturer of polymers.
The Rompetrol petrol stations network of the KMG International group has over 1000 points of sales in Romania, Moldova, Georgia, Bulgaria, as well as in France and Spain, by holding 51/49 percent shares in independent Dyneff SAS oil and gas company together with China SEFC Energy Limited Company.
Subsidiary enterprise KMG Trading is a single operator, engaged in export of crude oil of the Company from the resources of the parent KazMunayGaz, as well as a trading activity operator on the international markets.