JSC KAZMUNAIGAS EXPLORATION AND PRODUCTION ANNOUNCES INTENTION TO LAUNCH GLOBAL OFFERING

/KASE, September 04, 2006/ - JSC KazMunaiGas Exploration and Production (Almaty) has spread today the press release, saying: Quotation start **NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN** This document is not a prospectus but an advertisement. Investors should not subscribe for any transferable securities referred to in this announcement except on the basis of information in the prospectus to be published in due course. FOR IMMEDIATE RELEASE 04 September 2006 JSC KAZMUNAIGAS EXPLORATION AND PRODUCTION ANNOUNCES INTENTION TO LAUNCH GLOBAL OFFERING JSC KazMunaiGas Exploration and Production ("KMG E&P" or the "Company"), one of the leading producers of crude oil in the Republic of Kazakhstan, today announces its intention to launch an offering of new ordinary shares to be admitted to trading on the Kazakhstan Stock Exchange and an offering of global depositary receipts representing ordinary shares ("GDRs") to be admitted to trading on the London Stock Exchange (together the "Offering"). The Company, headquartered in Astana, is the third largest crude oil producer in the Republic of Kazakhstan in terms of annual production volume (based on 2005 data*). The Company had proved plus probable oil reserves of approximately 1,515 million barrels as at 31 December 2005** and average daily oil production in 2005 of 188 thousand barrels per day. The Company extracts hydrocarbon resources from 44 oil and gas fields located in the Atyrau and Mangistau regions in western Kazakhstan and is also engaged in onshore exploration activities, concentrated in the same areas. The Company is majority owned by JSC NC KazMunaiGas ("NC KMG"), the national oil and gas company which is controlled by Kazakh state via the newly-established state holding company JSC Samruk. The Company has extensive expertise derived from nearly 100 years of production history by its predecessors. It enjoys a strong relationship with its majority shareholder, NC KMG through which the Company benefits from: - rights of first refusal over existing onshore subsoil oil and gas exploration and production contracts which come up for sale; - preferential access to rights over unlicensed onshore oil and gas acreage; and - access to export pipeline infrastructure. Financial Information The Company's total revenues increased from 178 billion tenge (US$1.2 billion) in 2003 to 237 billion tenge (US$1.7 billion) in 2004 and to 346 billion tenge (US$2.6 billion) in 2005. Its profit from continuing operations increased from 41 billion tenge (US$275 million) in 2003 to 74 billion tenge (US$550 million) in 2004 and to 142 billion tenge (US$1,068 million) in 2005. Askar Balzhanov, the Director General, said: "I am very pleased that today KMG E&P has launched its global IPO. This marks the beginning of a new future for us and indeed for the Kazakh oil and gas industry as a whole. We will become the first internationally listed oil and gas company based in Kazakhstan. The Offering will provide funds which will permit us to continue to grow the Company." Details of the Offering The Company, which already has a listing on the Kazakhstan Stock Exchange ("KASE"), intends to offer new ordinary shares to investors both inside and outside Kazakhstan. The Company is seeking a listing on the London Stock Exchange for the GDRs. It intends to offer only to institutional investors outside Kazakhstan. The Offering is subject to receipt of all necessary regulatory approvals, including the relevant registrations and approvals by the Agency of the Republic of Kazakhstan on the Regulation and Supervision of the Financial Market and Financial Organisations ("FMSA") and the UK Financial Services Authority. The Company successfully completed a rights issue on 28 August 2006 in which NC KMG waived the majority of its proportionate rights in order to leave shares available for the Company to sell in the Offering. It is expected that after the Offering not less than 60% of KMG E&P's ordinary share capital will be held by NC KMG. In connection with the Offering, the Company's shareholders, at an Annual General Meeting held on 28 August 2006, elected three Independent Non- Executive Directors to its Board: Mr. Christopher Mackenzie, Mr. Paul Manduca and Mr. Eddie Walshe. The three new independent Directors join four existing Directors appointed by NC KMG, including Mr. Zhakyp Marabayev, Chairman of KMG E&P. Mr. Askar Balzhanov, the Director General since June 2006, completes the Board of Directors. The Company has appointed ABN AMRO Rothschild and Credit Suisse as Joint Global Coordinators and Joint Bookrunners. Visor Capital will act as Domestic Lead Manager and domestic settlement agent. Merrill Lynch will act as Co-Lead Manager. *** Notes to editors The Company's Board of Directors comprises the following individuals: Zhakyp Marabayev (Chairman and Non-Executive Director) resigned from the position of the General Director of the Company on 7 June 2006 and was appointed Managing Director of NC KMG. He was elected as a director of the Company on 30 March 2004 and Chairman of the Board of Directors on 26 June 2006. After graduating from the Moscow Institute of petrochemical and gas industry named after I.M. Gubkin he has gained broad experience in the oil and gas field working in various positions in the Komsomolskneft NSEH, KazakhstanCaspianShelf JSC, Kazakhoil NOC CJSC, KTO, the Ministry of Foreign Economical Affairs of Kazakhstan, the Ministry of Energy and Fuel Resources, and the Halyk Savings Bank of Kazakhstan. Askar K. Balzhanov (Director General) was appointed General Director of the Company on 7 June 2006. Prior to this appointment he was the General Director of the JSC ''KazMunaiTeniz'', a subsidiary of NC KMG specialising in off-shore oil and gas operations. After graduating from the Moscow Institute of petrochemical and gas industry named after I.M. Gubkin he has gained broad experience in the oil and gas field working in various positions in such hydrocarbon enterprises as Embaneft PA, KazakhstanNefteGas SE, KazakhstanMunaiGas SE, KazRosGas CJSC, and NC KMG. Yerzhan A. Zhangaulov (Non-Executive Director) was appointed Managing Director of NC KMG on 4 May 2006 and was elected as a director of the Company on 12 June 2006. Prior to this appointment he was Executive Director on Legal Support of NC KMG. Also he headed the legal service and HR department in the Administration of the President of Kazakhstan and also was the adviser to the Vice-President in NC KMG. He obtained a law degree in Karaganda State Institute in 1992. Yevgeny K. Ogay (Non-Executive Director) has been is the Managing Director of NC KMG since 24 November 2004 and was elected as a director of the Company on 12 June 2006. Since 2003 he worked as director of the department for share management in joint ventures in NC KMG. He has worked as an oil projects manager in Needham Group Inc. since 1992. He has graduated from Moscow Oil and Gas Institute in 1969. Dr. Ogay is the author of 2 books, 7 patents and more than 50 publications. Assia Syrgabekova (Non-Executive Director) has been appointed Managing Director of economics and finances at NC KMG in July 2004 and was elected as a director of the Company on 4 July 2006. Prior to this appointment she was First Deputy Chairman at Halyk Bank from October 2003. From 1998 to 2003 Ms. Syrgabekova has worked in the national oil and gas companies holding various top management positions: KazakhOil, KazTransGas. She graduated from Kazakh state University's Department of Economics in 1982. Christopher MacKenzie (Independent Non-Executive Director) has over 20 years of international experience in mergers and acquisitions and investment banking having worked for companies such as JP Morgan, GE Capital and Brunswick Capital in UK, US, Japan and Russia. He holds a Master's degree from University of Oxford (Law and modern languages) and an MBA from INSEAD. He was elected as a director of the Company on 28 August 2006. Paul Manduca (Independent Non-Executive Director) has extensive asset and investment management experience having worked for companies such as Threadneedle Asset Management, Rothschild Asset Management, Deutsche Asset Management in UK and Europe starting from 1975. Mr Manduca has served on a number of boards as an independent director in the last 10 years and at various points he headed audit, remuneration and appointment committees of such boards. He holds a Master's degree from University of Oxford (Law and modern languages). He was elected as a director of the Company on 28 August 2006. Eddie Walshe (Independent Non-Executive Director) has over 35 years experience in the oil and gas sector. Mr Walshe has worked in various roles at British Petroleum and British Gas and oversaw the overseas exploration and productions operations of these companies in Nigeria, Abu-Dhabi, Central Asia and South-East Asia. Mr Walshe has a PhD in Solid State Chemistry from the University of Dublin. He was elected as a director of the Company on 28 August 2006. *** For further information, please contact: KMG E&P Press Office (+7 3172 97 79 08) Lyazzat Kokkozova E-mail: pr@kmgep.kz KMG E&P Investor Relations (+7 3172 97 54 33) Alexander Gladyshev E-mail: ir@kmgep.kz Citigate Dewe Rogerson (+44 20 7638 9571) Martin Jackson David Westover *** Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. You can identify forward looking statements by terms such as "expect," "believe," "anticipate," "estimate," "intend," "will," "could," "may" or "might" the negative of such terms or other similar expressions. The Company wishes to caution you that these statements are only predictions and that actual events or results may differ materially. The Company does not intend to update these statements to reflect any events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of the Company, including, among others, general economic conditions, the competitive environment, risks associated with operating in Kazakhstan, market change in the oil and gas industry, as well as many other risks specifically related to the Company and its operations. Neither this press release nor any copy of it may be taken or transmitted into the United States, Australia, Canada or Japan. This press release does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefor. The offer and the distribution of this press release and other information in connection with the listing and offer in certain jurisdictions may be restricted by law and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This communication is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). The GDRs will only be made available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this communication or any of its contents. Stabilisation/FSA This document is an advertisement for the purposes of the applicable measures implementing the Prospectus Directive and does not constitute or form part of any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for any securities. A prospectus prepared pursuant to the Prospectus Directive is intended to be published, which, if published, can be obtained from the registered office of the Company and any purchase or application for securities should only be made on the basis of the information contained in such prospectus. These materials are not an offer for sale of any securities of KMG E&P in the United States. Any securities of the Company may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. The Company has not registered and does not intend to register any portion of the offering in the United States or to conduct a public offering of any securities in the United States. Information contained in this press release does not constitute a public offer or an advertisement of the GDRs in Kazakhstan, is not an offer, or an invitation to make offers, to purchase GDRs in Kazakhstan, and must not be passed on to third parties or otherwise be made publicly available in Kazakhstan. The GDRs have not been and will not be registered in Kazakhstan and are not intended for "placement" or "public circulation" in Kazakhstan. ABN AMRO Rothschild and Credit Suisse Securities (Europe) Limited, which are regulated in the United Kingdom by the Financial Services Authority, are acting exclusively for the Company and no-one else in connection with the Offering and will not be responsible to any other person for providing the protections afforded to their respective clients or for providing advice in relation to the Offering. Quotation end [2006-09-04]