MOODY'S ASSIGNS (P) BAA1 RATING TO KAZMUNAYGAS NC GMTN ISSUE; STABLE OUTLOOK

/REUTERS, Moscow, June 16, 2008, IRBIS/ - Moody's Investors Service has assigned a provisional senior unsecured issuer rating of (P) Baa1 to the debut USD 3.0 billion Global Medium Term Note Programme issue by JSC National Company KazMunayGas ("KMG NC"). The rating outlook is stable. The Notes will be placed in several tranches with different long-term maturities. The issuer of the notes is KazMunaiGaz Finance Sub B.V., a 100% owned subsidiary of KMG NC that will act as a Guarantor for the Notes. The obligations of the Guarantor will rank at least pari passu with all senior unsecured and unsubordinated obligations of the Guarantor. Upon a conclusive review of the transaction and associated documentation, Moody's will assign a definitive rating to the Notes issue. A definitive rating may differ from a provisional rating The funds raised from the Notes issue are expected to be used by KMG NC group for general corporate purposes including refinancing or retiring existing indebtedness as well as to fund the company's share in CAPEX of the Kashagan project, which is estimated to grow going forward, assuming KMG NC's anticipated increased participation in the project. Moody's regards KMG NC as a government-related issuer (GRI) and thus ratings incorporate uplift from KMG's baseline credit assessment of 12 (on a scale of 1 to 21 and equivalent to Ba2 rating) accounting for high implied state support and the company's medium dependence. Based on KMG NC's robust 2007 results, substantial cash reserves within the group and the fact that a significant part of the proceeds from the Notes issue will be used to refinance KMG NC's existing debt obligations, the agency believes that the Notes debt issuance can be accommodated within the current rating category. Moody's also acknowledges that the Notes issue will allow alleviate some short term liquidity pressure on the company due to the significant amount of bridge facilities maturing in 2008. Moody's also understands that the group is currently in the process of attracting a syndicated unsecured loan for up to USD 2.5 billion, to be used to refinance the USD 3.1 billion bridge loan raised by the group in 2007 to fund the acquisition of 75% stake in Romanian refinery, Rompetrol. Moody's views positively the steps taken by KMG NC to refinance the substantial share of its short term borrowings, bringing in line the long term nature of the company's expenditures with the tenor of funding sources. In assigning the ratings to JSC NC "KazMunayGas", Moody's has taken into account: (i) the company's strategic importance in the Kazakh economy as it is representing state strategic interests in the gas and oil industry; (ii) its key position within the group where NC KMG fully or majority owns a substantial part of Kazakhstan oil and gas sector companies; (iii) strong revenues and cash flow generation coming from oil and gas exploration activities supported by currently robust macro-economic and pricing environment for hydrocarbons; (iv) sizeable asset base and strong market and competitive positions of the company's subsidiaries; (v) positive track record and solid growth prospects for the company's E&P business, specifically KazMunayGas Exploration Production, Tengiz and Kashagan oil projects; and (vi) KMG NC's oil and gas transportation segments which provides the company with a favorable diversification into utility-type earnings supported by relatively stable and transparent regulations. At the same time the rating reflects the overall transformational risk relating to the company's consolidated business profile, and KMG NC's recent efforts to strengthen the integration of its asset base through sizable debt-financed acquisitions. Increased acquisition and refinancing risk, as well as negative free cash flow generated by the company for the past two years as a result of large acquisitions and CAPEX investment, are constraining factors for the rating. The BCA also reflects the group's complexity and the informational and transparency challenges on the consolidated basis given the holding structure of the group and the nature of certain disclosures. Moody's also notes that the group is currently in discussions with certain lenders to rectify technical breaches on a number of small debt facilities at subsidiary levels, including Rompetrol and KazTransGas. However, taking into account the modest size of these debt facilities within the context of the group's wherewithal and prospect of achieving a satisfactory resolution via the receipt of waivers or repayment, Moody's has not adjusted its outlook or its ratings. The Baa1/Stable issuer rating anticipates that KMG's financial ratios will continue to remain at a comfortable level over the medium term as a result of strong cash flow generation and moderate leverage. JSC NC "KazMunayGas", headquartered in Astana, Kazakhstan, is the indirectly (through the "Samruk" holding company) wholly-state-owned vertically integrated oil and gas operator with core operations in exploration and production, refining, domestic oil and gas transportation, and marketing and trading of oil and petroleum products sectors. In 2007 the company generated USD 11.8 billion in revenues and EBIT of USD 5.3 billion. London Stuart Lawton Managing Director European Corporates Moody's Investors Service Ltd. JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Moscow Victoria Maisuradze Vice President - Senior Analyst Corporate Finance Group Moody's Eastern Europe Telephone: +7 495 641-1881 Facsimile: +7 495 641-1897 [2008-06-17]