On the ratification of the Act of Transfer and Consent (Rehabilitation Project of the Uzen Oil Field) between the Republic of Kazakhstan, the International Bank for Reconstruction and Development and the Closed Joint-Stock Company National Oil and Gas Company Kazakhoil

Home / RLA / On the ratification of the Act of Transfer and Consent (Rehabilitation Project of the Uzen Oil Field) between the Republic of Kazakhstan, the International Bank for Reconstruction and Development and the Closed Joint-Stock Company National Oil and Gas Company Kazakhoil

On the ratification of the Act of Transfer and Consent (Rehabilitation Project of the Uzen Oil Field) between the Republic of Kazakhstan, the International Bank for Reconstruction and Development and the Closed Joint-Stock Company National Oil and Gas Company Kazakhoil

Law of the Republic of Kazakhstan dated July 26, 1999 No. 459-1

To ratify the Act of Transfer and Consent (Rehabilitation Project of the Uzen Oil Field) between the Republic of Kazakhstan, the International Bank for Reconstruction and Development and the closed joint stock company National Oil and Gas Company Kazakhoil, concluded in Washington on July 16, 1999.

President of the Republic of Kazakhstan

Act of Transfer and Consent to the Agreement No. 4061-KZ

Transfer and Consent Act (Rehabilitation Project for the Uzen oil field) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development and the Closed Joint-Stock Company National Oil and Gas Company Kazakhoil dated July 16, 1999

This Act was drawn up on July 16, 1999 by the Republic of Kazakhstan (the Republic of Kazakhstan), the International Bank for Reconstruction and Development (the Bank) and the closed Joint Stock Company National Oil and Gas Company Kazakhoil (NOC Kazakhoil). Hereby (A) the Bank has agreed, in accordance with the Loan Agreement dated July 18, 1996, concluded between the Republic of Kazakhstan and the Bank, including the amendments thereto (Loan Agreement), to allocate To the Republic of Kazakhstan, amounts in various currencies equivalent to one hundred and nine million US dollars ($109,000,000) (Loan) on the terms and conditions stipulated in the Loan Agreement, provided that Uzenmunaigas JSC (UMG) agrees to assume such obligations to the Bank as stipulated in the Project Agreement, concluded on the same date between the Bank and UMG (Project Agreement); (B) in accordance with the sub-loan agreement dated December 11, 1996, concluded between the Republic of Kazakhstan and UMG (Sub-Loan Agreement), the Loan funds provided under the Loan Agreement were re-credited (UMG) for the terms and conditions stipulated in the Sub-Loan Agreement; (C) The Republic of Kazakhstan, in accordance with Presidential Decree dated March 4, 1997 and Resolution of the Government of the Republic of Kazakhstan No. 410 dated March 24, 1997, established NOC Kazakhoil in the form of a closed joint-stock company, which is required, among other things, to conduct exploration, development, production and processing of hydrocarbons, and transferred its share in production sharing, royalties and other agreements on exploration, development, production and processing of hydrocarbons, including its share in the Consortium for the Caspian Pipeline, (D) The Republic of Kazakhstan, based on political considerations, has decided to implement all oil and gas projects through NOC Kazakhoil and therefore intends to transfer its rights and obligations under the Loan Agreement to NOC Kazakhoil; (E) The Republic of Kazakhstan agrees to provide guarantees for the obligations of NOC Kazakhoil as the legal successor under the Loan Agreement, as provided for in the Guarantee Agreement concluded or to be concluded between the Republic of Kazakhstan and the Bank; and (F) NOC Kazakhoil, taking into account the said guarantee of the Republic of Kazakhstan and the Bank's consent to I agree to the said transfer by the Republic of Kazakhstan in his favor and am ready to accept and exercise the rights and obligations under the Loan Agreement on the terms provided for in this Agreement. Considering the above, the parties to this act hereby agree on the following:

Article I Transfer and Guarantee of the Republic of Kazakhstan Section 1.01. Provided that NOC Kazakhoil agrees to certain amendments made to the Loan Agreement, the Republic of Kazakhstan hereby designates and transfers all its rights and obligations under the Loan Agreement to NOC Kazakhoil and authorizes NOC Kazakhoil to exercise and fulfill all of these rights and obligations instead of the Republic of Kazakhstan. Section 1.02. Provided that NOC Kazakhoil accepts and agrees to the appointment and amendments to the Loan Agreement, as indicated below, the Republic of Kazakhstan hereby grants and transfers all rights and obligations under the Sub-Loan Agreement to NOC Kazakhoil and authorizes NOC Kazakhoil to use and perform all specified rights and obligations instead of Of the Republic of Kazakhstan. Section 1.03. Taking into account that the Bank gives its consent to the said transfer, the Republic of Kazakhstan (the Guarantor) hereby agrees to formalize and provide a guarantee agreement (Guarantee Agreement) in favor of the Bank in the form attached in Annex I to this Act.

Article II Acceptance and Consent of NOC Kazakhoil Section 2.01. NOC Kazakhoil hereby accepts the appointment, transfer and the right vested in it from the Republic of Kazakhstan and agrees to the amendments to the Loan Agreement in accordance with Section 1.01 of this Act. NOC Kazakhoil subsequently replaces the Republic of Kazakhstan as the borrower in the Loan Agreement, and the Loan Agreement is amended accordingly, as indicated in the amended and reissued Loan Agreement (Amended and Reissued Loan Agreement) attached in Annex II to this Act. NOC Kazakhoil hereby agrees and confirms that it fully complies with the terms of the Amended and Restated Loan Agreement. Section 2.02. NOC Kazakhoil hereby also accepts the appointment, transfer and the right granted to it from the Republic of Kazakhstan in accordance with Section 1.02 of this Act. NOC Kazakhoil subsequently replaces the Republic of Kazakhstan as a creditor in the Sub-Loan Agreement, and the Sub-Loan Agreement is amended accordingly. NOC Kazakhoil hereby agrees and confirms that it fully complies with the terms of the Sub-Loan Agreement. Section 2.03. NOC Kazakhoil hereby represents, and the Republic of Kazakhstan hereby confirms that the founding documents of NOC Kazakhoil have been duly registered in accordance with applicable laws and procedures, and that NOC Kazakhoil is endowed with the rights and powers to assume the rights and obligations of the Republic by these documents. Kazakhstan under the Loan Agreement and the Sub-Loan Agreement.

Article III Consent of the Bank Section 3.01. Provided that NOC Kazakhoil fully assumes its obligations under the Amended and Reissued Loan Agreement and the amended Sub-Loan Agreement, and without prejudice realizing its rights under the Guarantee Agreement, the Bank hereby agrees to the aforementioned appointment, transfer and vesting of rights, and accepts the subsequent replacement of NOC "Kazakhoil" instead of the Republic of Kazakhstan, as specified in Section 2.01 and Section 2.02 of this Act. The Bank also agrees to the changes presented in the Amended and Restated Loan Agreement.

Article IV Entry into Force; Appendices; and Addresses Section 4.01. The following events are the conditions for the entry into force of this Agreement: (a) an opinion or conclusions satisfactory to the Bank, a lawyer acceptable to the Bank, on behalf of the Republic of Kazakhstan and NOC Kazakhoil that the transfer of rights and obligations is duly authorized, and that this Act of Transfer and Consent is duly executed and submitted on behalf of the Republic of Kazakhstan and NOC Kazakhoil and it is legally binding on the parties in accordance with its terms.; (b) a certificate satisfactory to the Bank that the Guarantee Agreement has been executed and submitted on behalf of the Republic of Kazakhstan; and (c) an opinion satisfactory to the Bank, a lawyer acceptable to the Bank, on behalf of the Guarantor, that the Guarantee Agreement has been duly authorized or ratified, and executed and submitted on behalf of It is legally binding on the Guarantor in accordance with its terms and conditions. It is hereby unconditionally understood and accepted by the parties that The Loan Agreement and the Sub-Loan Agreement, and the rights and obligations of the parties under these agreements remain unchanged, and the assignment, transfer, assignment of rights, amendments, corrections and consent related thereto do not enter into force until the Bank sends a notification to the Republic. Kazakhstan and NOC Kazakhoil, announcing that the above conditions have been fulfilled.

Section 4.02. Unless the Bank agrees otherwise, this Agreement will be cancelled if it does not enter into force within ninety (90) days from this date. Section 4.03. Annex I and Annex II to this Agreement are an integral and integral part of this Agreement. Section 4.04. The following addresses of the parties are used to send notifications and requests regarding this Agreement: For the Republic of Kazakhstan: Ministry of Finance St. Beibitshilik, 11 473000, Astana, Republic of Kazakhstan Telex: 251 245 FILIN For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C.20433 United States of America Cable address: Telex: INTBAFRAD 248423 (RCA) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) For NOC Kazakhoil: Republic Avenue, 60 473000 Astana Republic of Kazakhstan In confirmation of this, the parties, acting through their duly authorized representatives, have signed this agreement. The agreement is with their respective names in the day and year, first written above. Republic of Kazakhstan Signed by Nurgaliev B.K. Authorized Representative of the International Bank for Reconstruction and Development Signed by Judy O'Conner Current Regional Vice President of Europe and Central Asia, Kazakhoil National Oil and Gas Company Signed by Nurgaliev B.K. Authorized Representative Appendix 1 Warranty Agreement Loan number 4061 KZ Guarantee Agreement (Uzen Oil Field Rehabilitation Project) between the Republic of Kazakhstan and the International Bank for Reconstruction and Development dated July 16, 1999 Loan number 4061-KZ Warranty Agreement

Agreement dated July 16, 1999 between the Republic of Kazakhstan (the Guarantor) and the International Bank for Reconstruction and Development (the Bank). Hereby (A) by means of an Act of Transfer and Consent (dated the same date, (dated July 16, 1999), drawn up by the Guarantor, the Bank and the National Oil and Gas Company Kazakhoil (the Borrower) (Act of Transfer and Consent), the Guarantor transfers its rights and obligations under the Loan Agreement, and the Borrower accepted the transfer and agreed to assume obligations under the Amended and Reissued The Loan Agreement attached to the Transfer and Consent Act; (B) The Bank has agreed to the said transfer on the terms and conditions stipulated in the Transfer and Consent Act, but only on condition that the Guarantor agrees to guarantee the Borrower's obligations with respect to the Loan as stipulated in this Agreement; and hereby the Guarantor, taking into account the Bank's participation in the Transfer and Consent Act drawn up with the Guarantor and the Borrower, agreed to such a guarantee for the obligations of the Borrower; So, considering the above, the parties hereby agree on the following:

Article I General Terms and Conditions; Definitions Section 1.01. "General Terms and Conditions Applicable to Loan and Guarantee Agreements" of the Bank, issued on January 1, 1985, as amended below (General Terms and Conditions), constitute an integral part of this Agreement. (a) The last sentence of Section 3.02 has been deleted. (b) The second sentence of Section 5.01 should be worded as follows: "Unless the Bank or the Borrower otherwise agree, transfers will not be made: (a) to the expense account in the territory of any country that is not a member of the Bank, or for goods produced in, or services supplied from, such territories.; or (b) for the purposes of any payments to individuals or entities, or for the import of goods, if such payments or imports, in the knowledge of the Bank, are prohibited by a decision of the United Nations Security Council adopted in accordance with Chapter VII of the Charter of the United Nations." (c) In Section 6.02. subparagraph (k) is renamed to subparagraph (1), and the new subparagraph (k) is supplemented as follows: "(k) In the event of an emergency in which any subsequent transfers under the Loan will not comply with the provisions of Article III, Section 3 of the Articles of Agreement of the Bank." Section 1.02. Unless the context otherwise requires, several conditions defined in the General Terms and Conditions and the Preamble of this Agreement, the Preamble and Section 1.02 of the Loan Agreement and the Act of Transfer and Consent have the corresponding meanings provided in them.

Articcle II Guarantee; Provision of funds Section 2.01. The Guarantor announces his commitment to perform the tasks As stipulated in Schedule 2 to the Loan Agreement, and in this part, without limiting or reducing any of its other obligations under the Guarantee Agreement, the Guarantor hereby unconditionally guarantees, as the primary bearer of the obligation, and not only as a guarantor, timely and punctual payment of the principal debt, interest charges and other Loan fees. and remuneration, if any, for advance payments on the Loan and punctuThe Guarantor announces his commitment to perform the tasks As stipud in Schedule 2 to the Loan Agreeme, and in this part, without limiting or reducing any of its other obligations under the Guarantee Agreement, the Guarantor hereby unconditionally guarantees, as the primary bearer of the obligation, and not only as a guarantor, timely and punctual payment of the principal debt, interest charges and other Loan fees. and remuneration, if any, for advance payments on the Loan and punctual fulfillment of all other obligations of the Borrower, Section 2.02. Without limiting or reducing the provisions of Section 2.01 of this Agreement, the Guarantor, as soon as there is a reasonable reason to believe that the funds available to the Borrower will not be sufficient to meet the costs required for the implementation of the Project, shall take special measures satisfactory to the Bank to ensure immediate The borrower or the issuance of a security order The Borrower's funds that are necessary to meet the required expenses.

Article III 3.01. The Guarantor must take the necessary measures (including non-imposition of restrictions, issuance of licenses and approvals) to enable the Borrower to fulfill the Project and all other obligations under the Loan Agreement. The Guarantor must refrain from taking any measures that could adversely affect the Borrower's solvency. 3.02. The Guarantor must allow the Borrower to sell crude oil in such a way

in a manner that the Borrower considers commercially feasible.

Article IV Representatives of the Guarantor; addresses Section 4.01. The Minister of Finance of the Guarantor is appointed as the representative of the Guarantor for the purposes of Section 11.03 of the General Terms and Conditions. Section 4.02. The following addresses are provided for the purposes of Section 11.01 of the General Terms and Conditions: For the Guarantor: Ministry of Finance Mira St., 11 473000, Astana, Republic of Kazakhstan Telex: 251 245 FArticle IV Representatives of the Guarantor; addresses Section 4.01. The Minister of Finance of the Guarantor is appointed as the representative of the Guarantor for the purposes of Section 11.03 of the General Terms and Conditions. Section 4.02. The following addresses are provided for the purposes of Section 11.01 of the General Terms and Conditions: For the Guarantor: Ministry of Finance Mira St., 11 473000, Astana, Republic of Kazakhstan Telex: 251 245 FILIN For the Bank: International Bank for Reconstruction and Development 1818 St., N.W. Washington D.C. 20433 United States of America Cable Address: Telex: INTBAFRAD 248423 (RCA) Washington, D.C. 82987(FTCC) 64145 (WUI) or 197688 (TRT) In confirmation of this, the parties, acting through their duly authorized representatives, have signed this Agreement under their respective names in (District of Columbia, United States America) on the day and year indicated on the first page of the written. Republic of Kazakhstan Signed by Nurgaliev Bolat Authorized Representative of the InternatiRepublic of Kazakhstan Signed by Nurgaliev Bolat Authorized Representative of the International Bank for Reconstruction and Development Signed by Judy O'Conner Regional

Agreement dated July 18, 1996 between the Closed Joint Stock Company National Oil and Gas Company Kazakhoil (Borrower) and the International Bank for Reconstruction and Development (the Bank). Since (A) the Borrower, having become convinced of the viability and priority of the Project described in Annex 2 of this Agreement, has requested the Bank's assistance in financing the Project; (C) The Project will be implemented by Uzenmunaigas (UMG) with the help of the Borrower and, as part of such assistance, the Borrower will provide UMG with the Loan funds provided by under this Agreement; and Since the Bank has agreed, on the basis of, among other conditions, the above, to provide a Loan to the Borrower on the terms stipulated in this Agreement and the Project Agreement dated the same date and concluded between the Bank and UMG; Thus, the parties hereby agree on the following:

Article 1 General Terms and Conditions; Definitions Section 1.01. The General Terms and Conditions applicable to the Bank's Loan and Guarantee Agreements dated January 1, 1985, together with the amendments set out below (General Terms and Conditions), form an integral part of this Agreement: (a) The last sentence of Section 3.02 is abrogated; (b) The second sentence of Section 5.01 has been amended to read as follows: "Unless the Bank and the Borrower agree otherwise, withdrawals should not be made: (a) for expenses in the territory of any country that is not a member of the Bank, or to pay for goods or services produced in such territories; or (b) for the purpose of making payments to persons or businesses for imported goods. if such a payment or import is, according to the information of the Bank, a decision of the UN Security Council adopted under Chapter VII of the UN Charter." I. In Section 6.02, subsection (k) is renamed subsection (1), and the new subsection (k) added should read as follows: "(k) An extraordinary situation has been created in which any further withdrawal of Loan funds will be at odds with the terms of Section 3 of Article III of the Agreement on the Bank's Contract." Section 1.02. Unless the context requires otherwise, some of the terms defined in the General Terms and Conditions and in the Preamble of this Agreement will have their respective meanings, and the following additional terms will have the following meanings: (a) "Block 3A" means the area demarcated as Block 3A of the Uzen Oil field. (b) "Project Agreement" means an agreement between the Bank and Uzenmunaigas (UMG) dated on the same date as this document, which may also be amended from time to time, and this term includes all schedules and agreements that are additional to the Project Agreement. (c) "Project preparation advance" means an advance for project preparation provided by the Bank to the Borrower in accordance with a Letter of Agreement dated November 8, 1995, between the Borrower and the Bank. (d) "Short-term working capital financing plan" means a short-term working capital financing plan UMG dated May 31, 1996, which may be amended from time to time with the consent of the Bank. (e) "Special Account" means the account referred to in the Section 2.02 (b) of this Agreement. (f) "Ancillary Loan Agreement" means an Agreement entered into between the Borrower and UMG in accordance with Section 3.01 (b) of this Agreement, which may also be amended from time to time, and this term includes all annexes to the Ancillary Loan Agreement. The term "Ancillary loan" means a loan granted in accordance with this agreement. (g) Technical and managerial know-how services means technical and managerial know-how transfer services and includes other consulting services. (h) "Maintenance" means well testing, logging, perforation and deconservation of wells and maintenance of facilities for major repairs, which must be provided in accordance with Parts B.1 and B.2 of this Project. (i) "UMG" or "Uzenmunaigas" means the company "Uzenmunaigas", a legal entity established and operating under the laws of the Borrower, and includes any legal successor or successors acceptable to the Bank. (j) "UMG Privatization Plan" means the Borrower's plan for the privatization of UMG in accordance with Section 3.05 of this Agreement, at the same time, the said plan may be amended from time to time with the consent of the Bank. (k) "Uzen Oil Field" means the Borrower's Uzen Oil field, which is such under the Borrower's license No. 254 dated September 5, 1995.

Article II Loan Section 2.01. The Bank agrees to provide the Borrower with a loan for the term and conditions specified or mentioned in the Loan Agreement in various currencies, the total amount of which will be equivalent to one hundred nine million dollars (109,000,000 dollars), which is the amount of funds withdrawn under this Loan, and the amount of each withdrawal will be be assessed by the Bank on the date of such withdrawal. Section 2.02. (a) The Loan amount may be withdrawn from the Loan account in accordance with the terms of Appendix 1 to this Agreement for expenses incurred (or, if the Bank agrees, to be incurred) based on the reasonable cost of the goods and services required for the Project described in Appendix 2 to this Agreement and financed from the funds of this Loan. (b) For the purpose of carrying out the Project, the Borrower may open and hold a special current account in dollars with a commercial bank that is acceptable to the Bank and on terms that are acceptable to the Bank, including adequate protection against set-off, confiscation or seizure. Funds must be transferred to the account and funds must be paid from the Special Account in accordance with the terms of Appendix 4 to this Agreement. (c) Immediately after the Agreement enters into force, the Bank must, on behalf of the Borrower, withdraw from the Loan account and pay itself the amount necessary to repay the entire amount of the Project Preparation Advance withdrawn and payable on that date, as well as pay all interest accrued on that amount. The balance that has not been withdrawn from the approved amount of the Advance for the preparation of the project will then be canceled. Section 2.03. The closing date will be December 31, 2000 or such later date as the Bank determines. The Bank will have to immediately inform the Borrower of such a later date. Section 2.04. The Borrower must pay a commission fee to the Bank at a rate of three-quarters of one percent (3/4 of 1%) per year, accrued on the principal amount of the loan, which periodically remains not withdrawn from the account. Section 2.05. (a) The borrower must pay interest on the principal amount of the loan that has been withdrawn and is not repaid from time to time, at a rate for each interest accrual period that is equal to the cost of qualified borrowings determined based on the previous six months, plus half the interest (1/2 of 1%). On each date specified in Section 2.06 of this Agreement, the Borrower must pay the interest accrued on the principal amount of the outstanding debt during the previous period for which interest is calculated at the rate applicable during such period for which interest is accrued. (b) As soon as possible, after the end of each semester, the Bank will notify the Borrower of the cost of qualified loans determined for this semester. (c) For the purposes of this section: (i) "Interest-bearing Period" means the six-month period ending on the day immediately preceding each date defined in Section 2.06 of this Agreement, beginning with the interest-bearing period during which this Agreement is signed. (ii) "Cost of qualified borrowings" means the cost reasonably determined by the Bank and expressed as a percentage per annum of the amount of outstanding borrowings of the Bank made after June 30, 1982, excluding such borrowings or parts thereof that the Bank has allocated to finance: (A) investments of the Bank; and (B) loans that could be issued by the Bank after July 1, 1989, the interest on which is determined on principles different from those specified in paragraph (a) of this Section. (iii) "Half-year" means the first six months or the second six months of a calendar year. (d) Paragraphs (a), (b) and (c) (iii) of this Section should be amended to read as follows on the date to be determined by the Bank and notified to the Borrower no later than 6 months in advance.: "(a) The borrower must pay interest on the principal amount of the loan that has been withdrawn and is outstanding for certain periods of time, at a rate for each quarter that is equal to the cost of qualified borrowings determined based on the previous quarter, plus half the interest (1/2 1%). On each date specified in Section 2.06 of this Agreement, the Borrower must pay the interest accrued on the principal amount of the outstanding debt during the previous interest-bearing period calculated at the rate applicable during the interest-bearing period." "(b) Notify the Borrower as soon as possible, after the end of each quarter, of the cost of qualified borrowings determined for that quarter." "(c) (iii) 'Quarter' means a three-month period beginning on January 1, April 1, July 1, or October 1 of a calendar year." Section 2.06. Interest and other fees must be paid every six months on May 15 and November 15 of each year. Section 2.07. The Borrower must repay the principal amount of the Loan in accordance with the repayment schedule specified in Appendix 3 of this Agreement.

Article III Project Implementation Section 3.01. (a) The Borrower declares its commitment to the Project objectives set out in Appendix 2 of this Agreement and, therefore, without any restrictions on its other obligations under the Loan Agreement, must ensure that the UMG fulfills all obligations specified in the Project Agreement, and must undertake or Ensure that all actions, including the provision of facilities, facilities, services, and other resources, are necessary and appropriate to enable UMG to fulfill such obligations., and also must not carry out or allow the implementation of any actions that will hinder or interfere with the fulfillment of such obligations. (b) The Borrower must re-lend the Loan funds to UMG on the basis of an Additional Loan Agreement concluded between the Borrower and UMG, on terms to be approved by the Bank, including the following: (i) the term of the Additional Loan Agreement must be 12 years, including a four-year grace period; (ii) The Borrower shall charge reservation fees at a rate equal to the reservation fees under Section 2.04 of this Agreement; (iii) The Borrower shall charge interest on the principal amount of the additional loan withdrawn and outstanding from time to time at a rate of 200 basis points (2%) above the rate payable under the terms of Section 2.05 of this Agreement; and (iv) the principal amount of the additional loan must be equivalent in dollar terms (to be determined on the date or the corresponding repayment dates) to the amount in currency or currencies withdrawn from the Loan account to cover Project costs. (c) The Borrower must exercise its rights stipulated in the Supplementary Loan Agreement in such a way as to protect the interests of the Borrower and the Bank and ensure that the objectives of this loan are fulfilled, and, unless otherwise agreed with the Bank, the Borrower must not assign, correct, cancel or withdraw from the Supplementary Loan Agreement; or any of its provisions. Section 3.02. Except in cases where there is an agreement with the Bank to the contrary, purchases of goods and works (including maintenance) and consulting services required for the implementation of the Project and Financed from the Loan funds must be provided in accordance with the terms of Annex 1 to the Project Agreement. Section 3.03. The Bank and the Borrower hereby agree that all obligations stipulated in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Terms and Conditions (related respectively to insurance, use of goods and services, plans and schedules, business management and reporting, maintenance and acquisition of land) must be fulfilled by UMG in accordance with Section 2.03 Project Agreements. Section 3.04. The Borrower must, together with UMG, implement a Short-term Working capital Financing Plan in a manner satisfactory to the Bank. Section 3.05. Unless otherwise agreed with the Bank, the Borrower must: (a) prepare a Plan for the privatization of UMG on the terms agreed with the Bank, and (b) implement this plan in a manner acceptable to the Bank. Section 3.06. The Borrower must take all reasonable steps to ensure that UMG crude oil is sold on an appropriate commercial basis.

Article IV Financial obligations Section 4.01.(a) For all expenses for which, based on the expense statements, funds have been withdrawn from the Loan account, the Borrower must: (i) maintain or ensure that, in accordance with sound accounting practices, documents or reports reflecting such expenses are maintained; (ii) ensure that all documents (contracts, orders, invoices, receipts, and other documents) attesting to such expenses are preserved for at least one year after the Bank receives the audit report for the financial year in which the funds were withdrawn from the Loan account; and (iii) ensure that representatives of the Bank the possibility of studying such documents. (b) The borrower must: (i) have the records and accounts referred to in paragraph (a) (i) of this Section, including those related to the Special Account (for each financial year), in accordance with appropriate and consistent auditing principles conducted by independent auditors that are acceptable to the Bank; (ii) to submit to the Bank, immediately upon receipt, but in any case not later than six months after the end of each such year, a report on such audit performed by the said auditors to such extent and with such detail as may be justified by the Bank, including a separate opinion of the said auditors on whether The expense statements provided during such a financial year, as well as the procedures and internal controls used during their preparation, are reliable in supporting the validity of related withdrawals.; and (iii) provide the Bank with such other information as the Bank may reasonably request from time to time regarding the said documents and accounts, as well as their audit. Section 4.02. (a) The Borrower must maintain accounting records and accounts accordingly to reflect, in accordance with international accounting practice, its transactions and financial situation. (b) The borrower must: (i) to conduct an audit by independent auditors acceptable to the Bank of its accounting, accounts and financial statements (balance sheet, income and expense records, and related statements) for each financial year in accordance with generally applicable auditing rules; (ii) to submit to the Bank immediately, but in any case no later than six (6) months after the end of each such year: (A) certified copies of its financial statements for each audit year and (C) an audit report prepared by the said auditors to such extent and with such detail as may be necessary are justified by the Bank; and (iii) provide the Bank with other information regarding accounting, accounts and financial statements, as well as audit, which may be reasonably requested from time to time by the Bank. Section 4.03. (a) Unless otherwise agreed with the Bank, the Borrower shall not assume any debt until the Borrower's net receipts for each audited financial year preceding the date of acceptance of such debt or for a later twelve-month period ending on the date of acceptance of the debt, no matter how large the debt was not, should be at least 1.5 times higher than the maximum debt servicing requirements of the Borrower for any subsequent fiscal year for all debts of the Borrower, including the assumed debt. (b) For the purposes of this Section: (i) The term "debt" means any debt owed by UMG. (ii) The debt will be considered recognized: (A) under a loan agreement, agreement, or other document providing for such debt or a change in payment terms on the date of such contract, agreement, or other document; and (C) under the warranty agreement, on the date of the agreement stipulated for the entry into force of the guarantees. (iii) The term "net receipts" means the difference between: (A) the amount of income from all sources related to production activities established to account for the effective interest of UMG at the time of debt acceptance, even if they were not valid during the twelve-month period with which such income and net non-production profit are associated; and (C) the sum of all expenses related to production activities, including administrative expenses, maintenance expenses, taxes and payments in lieu of taxes, but excluding depreciation, other non-cash production expenses, interest and other debt expenses. (iv) The term "net non-productive profit" means the difference between: (A) income from all other sources unrelated to production; and (C) expenses, including taxes and payments in lieu of taxes, incurred in the process of generating income under paragraph (A). (v) The term "debt service requirements" means the total amount of payments (including depreciation fund payments, if any), interest and expenses on the debt. (vi) For the purposes of this Section, it would be necessary to assess, on the basis of the Borrower's currency, debt payable in another currency, such assessment should be based on the prevailing statutory interest rate in which the currency at the time of assessment is denominated, available for the purpose of servicing such debt, or, in the absence of such a rate, based on the interest rate acceptable to the Bank.

Article V Bank Sanctions Section 5.01. In accordance with Section 8.02 (1) of the General Terms and Conditions, the following additional events are defined: (a) UMG will not be able to fulfill any of the obligations under the Project Agreement. (b) As a result of events that occurred after the date of the Loan Agreement, an extraordinary situation will arise that will result in UMG being unable to fulfill its obligations under the Project Agreement. (c) UMG's Charter dated November 25, 1994, or any other constituent documents replacing it agreed with the Bank, will be amended, cancelled, suspended, cancelled or revoked, which will significantly and negatively affect UMG's ability to fulfill its obligations under the Project Agreement. (d) The Borrower or any other authority with jurisdiction will take any action aimed at dissolving or abolishing UMG, or suspending its activities. Section 5.02. The following additional events are defined in accordance with Section 7.01 (h) of the General Terms and Conditions: (a) any event specified in paragraph (a) of Section 5.01 of this Agreement will occur and will continue for sixty (60) days after notification thereof is transmitted by the Bank to the Borrower; (b) any event specified in paragraphs (c) and (d) of Section 5.01 of this Agreement will occur. Agreements.

Article VI Date of entry into force of the Agreement; Termination of the Agreement Section 6.01. The following events are defined as additional conditions for the entry into force of the Loan Agreement within the meaning of Section 12.01 (c) of the General Terms and conditions: (a) The Supplementary Loan Agreement was concluded on behalf of the Borrower and UMG; and (b) the Plan for the Privatization of UMG was prepared in accordance with Section 3.05 of this Agreement; (c) Consultants are employed by UMG on terms satisfactory to the Bank to provide technical and managerial support to UMG in the implementation of Project management and operation management of the Uzen oil field. Section 6.02. The following are defined as additional aspects within the meaning of Section 12.02 (c) of the General Terms and Conditions to be included in the opinion or opinions provided to the Bank: (a) that the Project Agreement has been duly authorized or approved by UMG and is legally binding on UMG in accordance with its terms; and (b) that The Supplementary Loan Agreement has been duly approved or ratified by the Borrower and UMG and is legally binding on the Borrower and UMG in accordance with its terms. Section 6.03. A period of ninety (90) days after the date of this Agreement is hereby determined with respect to Section 12.04 of the General Terms and Conditions.

Article VII Representatives of the Borrower; Addresses Section 7.01. The President of the Borrower is appointed as the representative of the Borrower in relation to Section 11.03 of the General Terms and Conditions. Section 7.02. The following addresses are defined in relation to Section 11.01 of the General Terms and Conditions: For the Borrower: Republic of Kazakhstan, Astana, 473000, ave. Republic, 60 For the Bank: International Bank for Reconstruction and Development 1818stret, N.W. Washington, DC 20433 United States of America Telegraphic Address: Telex INTBAFRAD 248423 (RCA) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) In confirmation of which, its participants, acting through their duly authorized representatives, ordered the signing of this Agreement on their behalf in the District of Columbia, United States of America on the date and year indicated above. Kazakhoil National Oil and Gas Company ____________________________ Authorized Representative of the International Bank for Reconstruction and Development ____________________________ Regional Vice President for Europe and Central Asia

Appendix 1

Disbursement of Loan funds

1. The table below identifies the categories of expenditures to be financed from the Loan, the amount of Loan appropriations for each Category, and the percentage of items to be financed for each Category.: Category Allocation Amount % of Loan funds for financed expenses (in dollar terms) (1) Goods 20,000,000 100% of foreign expenses, 100% of local expenses (ex-factory price) and 75% of local expenses for other items for which purchases are made domestically (2) Works/ground 23,000,000 82% structures Part A. (3) Technical 39,000,000 100% of overseas service costs (4) Technical and 17,500,000 100% of management services (5) Personnel training 2,400,000 100% (6) Refund of the advance of 1,500,000 Amount payable Project preparation in accordance with Section 2.02 (c) of this agreement (7) Not distributed 5,600,000 Total: 109,000,000 2. In relation to this Application:

(a) the term "foreign expenses" means expenses in the currency of any country other than the currency of the Borrower's country for goods and services supplied from the territory of any country other than the Borrower's country; and (b) the term "local expenses" means expenses in the currency of the Borrower or for goods and services supplied from the territory of the Borrower. 3. Regardless of the conditions of the previous paragraph 1, withdrawals must not be made to pay for expenses: (a) incurred prior to the signing of this Agreement; and (b) within Category 5, until a staff training strategy is developed and adopted by UMG in accordance with paragraph 5 of Annex 2 of the Project Agreement. 4. The Bank may require that withdrawals from the Loan account be made based on expense statements when paying for: (a) goods and works under contracts valued at less than 50,000 in dollars, and (b) contractual services for firms whose contracts are valued at less than 100,000 in dollars, and, in the case of individuals, the value of the contracts is 50,000 in dollars, on terms that the Bank must notify the Borrower about.

Appendix 2

Project Description

The objectives of the project are: (i) reducing the rate of decline in production at the Uzen oil field and creating resources for reinvestment in it; (ii) facilitating the reorganization of Uzenmunaigas into viable corporate units and its/their privatization; (iii) assessing the impact of past production practices on the current state of productive formations, wells and the environment of the field; (iv) contributing to the elimination of the consequences of past environmental damage and strengthening environmental monitoring and management; (v) training Uzenmunaigas employees in modern methods of working in oil fields and improving their ability to manage the implementation of the oil field rehabilitation and operation program. The Project consists of the following parts, which may be used from time to time and by mutual agreement of the Bank and the Borrower to achieve these goals: Part A. Investments in physical objects 1. Subsurface rehabilitation: (a) Provision of equipment and spare parts for major repairs of about 400 oil producing and about 100 injection wells. (b) Provision of chemicals for major repairs and oil production. 2. Rehabilitation of surface facilities: (a) Replacement of about 340 outlet pipelines, with a total estimated length of 205 kilometers (km) (about 135 km of 3-inch diameter pipes and about 70 km of 4-inch diameter pipes), which connect oil production wells with storage facilities. (b) The relocation of satellites and the integration of existing storage facilities into approximately 8 facilities equipped with test and group separators, as well as appropriate flowmetric and monitoring equipment. (c) Replacement of the oil/water transfer pipelines between the storage facilities and the existing central processing plant and installation of new pumping pipelines between the new storage facilities and the reservoir injection plant at Block 3A. (d) Modification of the existing central oil processing plant to create a specialized process chain for crude oil produced at the Block 3A. (e) Installation of a complete water treatment system at the pumping station of Unit 3A. (f) Replacement of existing water pumps and high-pressure water pipes connecting water pumping stations and injection wells with the necessary flowmetric and monitoring equipment. 3. Environmental protection and restoration Provision of equipment for laboratory analysis and environmental monitoring; cleaning and experimental restoration of vegetation cover of individual zones, creation of a database on the current ecological state of the Uzen oil field. Part B. Support for investments in physical facilities 1. Provision of services for testing, logging, perforation and deconservation of wells. 2. Provision of major well repair facilities for the implementation of the overhaul program for about 400 wells. 3. Provision of technical and managerial know-how services for project planning and management, engineering design and construction, as well as supervision of well repairs; management of productive reservoir development and production; staff training of the Uzenmunaigas company. Part C. Organizational development 1. Strengthening the management of the Uzenmunaigas company by improving

its financial and production information systems through the provision of technical and management services, know-how and equipment. 2. Improving the financial management of Uzenmunaigas, as well as accounting practices and systems through the provision of technical and management services, know-how and equipment. 3. The Project is expected to be completed by June 30, 2000.

Appendix 3 Repayment scheme Payment term Repayment of the principal amount (in US dollars) November 15, 2001 4,540,000 May 15, 2002 4,540,000 November 15, 2002 4,540,000 May 15, 2003 4,540,000 November 15, 2003 4,540,000 May 15, 2004 4,540,000 November 15, 2004 4,540,000 May 15, 2005 4,540,000 November 15 , 2005 4,540,000 May 15 , 2006 4,540,000 November 15, 2006 4,540,000 May 15, 2007 4,540,000 November 15, 2007 4,540,000 May 15, 2008 4,540,000 November 15, 2008 4,540,000 May 15, 2009 4,540,000 November 15, 2009 year 4,540,000 May 15 , 2010 4,540,000 November 15 , 2010 4,540,000 May 15 , 2011 4,540,000 November 15 , 2011 4,540,000 May 15 , 2012 4,540,000 November 15 , 2012 4,540,000 May 15 , 2013 4,540,000 --------------------------------------------------------------------------- 109,000,000 _____________________ The figures in this column represent the dollar equivalent determined on the relevant withdrawal date. See General Terms and Conditions, Sections 3.04 and 4.03. Early repayment premium According to Section 3.04. (b) General Terms and Conditions the premium payable and accrued on the principal amount with any maturity that is repaid ahead of schedule will be equal to the interest rate determined below based on the time of early repayment: Early release time Prize Repayment The interest rate (expressed as a percentage per annum) accrued on the loan amount on the day of early repayment, multiplied by: No more than three years to maturity 0.18 More than three years but no more than six years to maturity 0.35 More than six years but no more than 11 years to maturity 0.65 More than 11 years but no more than 15 years to maturity 0.88 More than 15 years to maturity 1.00

Appendix 4

Special account

1. For the purposes of this Annex: (a) the term "Eligible Categories" means categories (1),(2),(3),(4) and (5) as defined in the table of paragraph 1 of Annex 1 of this Agreement; for the avoidance of doubt, it is clarified that the term "Eligible Categories" includes The categories mentioned above are only and to the extent that the expenditure conditions, if any, in relation to paragraph 3 of Annex 1 to this Agreement have been fulfilled.; (b) the term "Eligible Costs" means costs related to reasonable costs for the purchase of goods and services necessary for the implementation of the project and financed from Loan funds allocated periodically to Eligible Categories in accordance with the terms of Annex 1 of this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to US$ 600,000 that is to be withdrawn from the Loan Account and deposited in a Special Account in accordance with paragraph 3 (a) of this Annex, provided, however, that unless otherwise agreed with the Bank, the Authorized Allocation will be limited to an amount equivalent to 100 thousand . USD, as long as the total amount The amount withdrawn from the Loan account plus the total amount of existing obligations for reserving credit lines assumed by the Bank, in accordance with Section 5.02 of the General Terms and Conditions, will not equal or exceed the equivalent of USD 3 million. 2. Funds will be paid from the Special Account exclusively for eligible expenses in accordance with the terms of this Application. 3. After the Bank receives satisfactory confirmation that the Special Account has been opened properly, withdrawals of authorized funds and subsequent withdrawals to replenish the Special Account will be carried out as follows: (a) In order to withdraw funds from Authorized Appropriations, the Borrower must submit to the Bank a request or requirements for transfers or transfers that must not exceed the total amount of Authorized Appropriations. Based on such request or requirements, the Bank must, on behalf of the Borrower, withdraw from the Loan Account and place in the Special Account such amount or amounts as the Borrower requests. (b) (i) In order to replenish the Special Account, the Borrower will provide the Bank with requests for funds to be transferred to the Special Account at such time intervals as the Bank determines. (ii) Prior to or at the time of such request, the Borrower must provide the Bank with the documents or other confirmations required in accordance with paragraph 4 of this Annex for the payment or disbursements for which the request for replenishment of the Special Account has been received. Based on such a requirement, the Bank must, on behalf of the Borrower, withdraw from the Loan account and place in a Special Account such amount as the Borrower requests and which must be used to pay from the Special Account the eligible costs indicated in the aforementioned documents and other confirmations. All such transfers must be withdrawn by the Bank from the Loan account in accordance with the relevant Eligible Categories and must amount to appropriate equivalent amounts, which are certified by the aforementioned documents and other confirmations. 4. For each payment made by the Borrower from a Special Account, the Borrower must, within the time period reasonably requested by the Bank, provide the Bank with documents or other confirmations showing that this payment was made solely for Eligible Expenses. 5. Despite the terms of paragraph 3 of this Appendix, the Bank will not be required to place further funds in a Special Account.: (a) if at any time the Bank determines that all other withdrawals must be made by the Borrower directly from the Loan account in accordance with the provisions of Article V of the General Terms and Conditions and paragraph (a) of Section 2.02 of this Agreement; or (b) if the Borrower is unable to provide to the Bank, within the time specified in Section 4.01 (b) (ii) of this Agreement, any of the audit reports required by the Bank in accordance with the said section in relation to audits, records and accounts of the Special Account; (c) if in At any time, the Bank will notify the Borrower of its intention to suspend, partially or completely, the Borrower's right to withdraw funds from the Loan account in accordance with Section 6.02 of the General Terms and Conditions.; or (d) as soon as the amount of the outstanding Loan funds allocated to Eligible Categories, less the amount of any existing special commitment that the Bank has entered into in accordance with Section 5.02 of the General Terms and Conditions for the Project, is equal to the equivalent of double the amount of Authorized Allocations. After that, the withdrawal of the remaining loan funds from the Loan account for allocation to Eligible Categories will be carried out in accordance with the procedures that the Bank will notify the Borrower about. Such further withdrawals will only have to be made to the extent and after the Bank is satisfied that all these amounts remaining in the Special Account on the date of such notification will be used to pay Eligible Expenses. 6. (a) If at any time the Bank discovers that any payment from the Special Account: (i) has been made at a cost or amount that is unacceptable in accordance with paragraph 2 of this Annex; or (ii) has not been substantiated by the evidence provided to the Bank, the Borrower must, immediately upon receiving notification from the Bank,: (A) provide such additional confirmation at the request of the Bank; or (C) to deposit in a Special Account (or, if the Bank requires, to return the funds to the Bank) an amount equal to the amount of such payment or that part of it which is unacceptable or unreasonable. Unless otherwise agreed with the Bank, the Bank will not make further transfers of funds to the Special Account until the Borrower provides such confirmations or makes such transfer or return of funds, as may be the case in such a case. (b) If the Bank ever determines that any unspent amount in the Special Account will not be needed to make further payments for eligible expenses, the Borrower must immediately, upon notifying the Bank, refund such unspent amount to the Bank. (c) The Borrower may, by notifying the Bank, refund to the Bank all or part of the funds deposited in the Special Account. (d) The funds returned to the Bank in accordance with paragraphs 6 (a), (b) and (c) of this Annex will be transferred to the Loan account for subsequent withdrawal or cancellation in accordance with the relevant terms of this Agreement, including the General Terms and Conditions.

(Experts: Sklyarova I.V., Tsai L.G.)

President

Republic of Kazakhstan

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