Moody's upgrades Intergas Central Asia to Baa1; Stable Outlook

/Frankfurt, November 28, 2006/ - Moody's Investor's Service has today upgraded the foreign currency issuer rating for Intergas Central Asia ("ICA") from Baa2 to Baa1 and rating for Backed Senior Unsecured Notes totaling USD 250 million from Baa2 to Baa1. The outlook on all ratings is stable. The upgrade is driven by the strengthening of the financial profile of ICA and reflects: (i) ICA's monopoly position in gas transmission within Kazakhstan for international transit, export and domestic supply under a long-term concession agreement (until 2017); (ii) strong geographical position integrated within the former Soviet Union gas network linking a region of increasing gas production in the Eastern Caspian and gas-rich Turkmenistan with Russia and the growing gas markets in Europe; (iii) the company's strategic importance to the strongly developing Kazakh economy and its integral relationship with the national oil and gas company Kazmunaigas; (iv) expected growth in demand for natural gas in Europe which would positively effect the volume being transported by ICA; (v) good growth prospects coming from increase in gas production in Kazakhstan and regional demand. However, the ratings remain constrained by; (i) the company's relatively heavy investment needs to maintain and increase the capacity of its ageing gas pipeline system; (ii) its dependence on an anticipated material increase in the volume of gas being exported from Turkmenistan via Kazakhstan to Russia; (iii) the need to sustain or raise tariff levels for the transmission of international gas flows through its pipelines; (iv) significant counterparty concentration risk. In accordance with Moody's GRI methodology, and the Baa1 foreign currency issuer ratings reflect the combination of the following inputs: - Baseline credit assessment of 12 (on a scale of 1-21, where 1 represents lowest credit risk) - Baa1 local currency rating of the Kazakhstan government - Low dependence - High support The baseline credit assessment of 12 is underpinned by the company's role as the state-owned gas transmission and supply utility of Kazakhstan. Low dependence reflects ICA's vital role in the transport of Central Asia gas to Gazprom and ultimately to Western Europe, from which it derives bulk of its revenues, and its strategic position from which it is able to earn significant export revenues, de-linking its financial performance from that of the Kazakhstan government . High support reflects the strategic importance of the company to the state, the interventionist history of the government, and the importance of energy export revenues to the economy of Kazakhstan. The rating outlook is stable reflecting the expectation that the company will increase gas throughput from third-party transit and export enabling it to bolster cash flows and strengthen debt protection measurements. ICA, a main subsidiary of Kaztransgas, headquartered in Astana, Kazakhstan, is the indirectly wholly-state-owned gas transmission company of Kazakhstan. With over 10,000 km of trunk pipelines, the company's transit in 2005 was 130 bcm of gas up from 121 bcm transported in 2004 and had revenues of USD 418 million and EBITDA of USD 176 million in 2005. Frankfurt Johannes Wassenberg Managing Director Corporate Finance Group Moody's Deutschland GmbH JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Moscow Larissa Loznova Vice President - Senior Analyst Corporate Finance Group Moody's Eastern Europe Telephone: +7-495-771-7146 Facsimile: +7-495-937-8290 [2006-11-28]