FITCH CHANGES KAZTRANSOIL'S OUTLOOK TO POSITIVE; AFFIRMS IDR AT 'BB+'

/REUTERS, August 14, 2006/: Fitch Ratings has today changed the Kazakhstan-based oil pipeline monopoly company JSC KazTransOil's ("KTO") Outlook to Positive from Stable. Its Issuer Default rating ("IDR") is affirmed at 'BB+' and Short-term rating at 'B'. The Positive Outlook foresees a gradual improvement in KTO's credit ratios as the company begins to generate revenue from the newly completed Atasu- Alashankou pipeline and further reduces debt. Higher cash flow from operations, combined with lower capital expenditure, is expected to return the company to a positive free cash flow position in 2006. KTO's free cash flow deteriorated in 2005 as a result of costs incurred by its joint venture with China's CNPC, the Kazakhstan-Chinese Pipeline LLP, for the construction of the Atasu-Alashankou trunk pipeline. KTO's IDR is supported by the strategic importance of the company to Kazakhstan's oil transportation infrastructure. It owns and operates 6,486 km of oil pipelines and controls at least 60% of the total oil transportation volume. KTO, which is classified as a natural monopoly in Kazakhstan, charges its customers a flat tariff for shipments through its pipeline. KTO has had stable tariffs since 2000, with an average of KZT2,413 per tonne per 1,000 km (1 USD = 122.58 KZT). For supplies to the domestic market, the company uses a discount ratio of 0.54. The amount of the tariff is set by the Anti Monopoly Agency of Kazakhstan and is based primarily on KTO's costs for maintaining and operating the pipeline. As such, this regulated tariff regime means upside profit growth for the company is limited. However, Fitch notes the expected additional earnings from the new Atasu-Alashankou pipeline, as well as from an increase in water transportation tariffs. The additional crude oil transportation volumes of around 10 million tonnes should help to support the company's already existing customer base, which presently guarantees transit of up to 20 million tonnes of Kazakhstan's oil via the Russian Transneft pipeline system per year. Of this volume of oil, 15 million tonnes are allocated to the Atyrau-Samara pipeline and up to 5 million tonnes to the Makhachkala- Tikhoretsk pipeline. KTO's financial policy can be categorized as moderate. The company's USD150 million Eurobond matured in July 2006 and was fully discharged. At the present time, the company does not intend to issue any new Eurobonds, as future capital expenditure is expected to be fully funded with cash generated from operations. Additionally, KTO's MunaiTas ("MT") subsidiary plans to make an early repayment on a USD15m credit facility, further reducing the group's consolidated debt. At the end of 2006, KTO expects to have consolidated total debt of USD175m versus USD267m in 2005. KTO has been the monopoly owner and operator of the Republic of Kazakhstan's oil pipeline network since 1997 and is the main provider of point-to-point oil export routing. As such it plays a crucial role in the development of Kazakhstan's oil reserves. KTO also owns and operates 2,434 km of water pipelines and is in charge of water transportation to the Atyrau and Mangistau areas. Contact: Jeffrey Woodruff, Moscow, Tel: +7 495 956 9986; Andrew Steel, London, +44 (0) 20 7862 4086. Media Relations: Alla Izmailova, Moscow, Tel: +7 495 956 9903; Jon Laycock, London, Tel: +44 20 7417 4327. [2006-08-14]