JPMorgan - KASE

Processing Fees
In addition to revenue generated from the refining and sale of product derived from acquired
feed stock, the refinery also refines crude on behalf of third parties, for which it derives a fee.
Total processing fees earned from third parties in the nine months ended September 30, 2002
amounted to $2.1 million and $8.6 million for the comparable period in 2001. This $6.5 million
decrease was attributable to lower prices for refined products.
The following table sets out the total quantity of oil processed into product and the average fee
charged:
Toller’s
Volumes
Processed
Processing
Fee
Processing
Fees
Earned
(Tonnes) ($/tonne) ($000’s)
Nine Months Ended September 30, 2002 .................... 135,234 15.62 2,112
Nine Months Ended September 30, 2001 .................... 539,791 15.97 8,623
Interest and Other Income
Revenues from interest and other income decreased $1.6 million from $8.1 million for the nine
months ended September 30, 2001 to $6.5 million for the corresponding period in 2002. The
decrease was primarily due to no Upstream asset sales being recognized in 2002.
Expenses
Production
Production expenses relate to the cost of producing crude oil in the Upstream operations and
were $41.7 million in the nine months ended September 30, 2002 compared to $29.7 million for
the comparable period in 2001. Based on the number of barrels of oil produced, these costs were
$1.19/Bbl for the nine months ended September 30, 2002 and $1.11/Bbl for the comparable
period in 2001.
The $12.0 million absolute increase in cost between the nine months ended September 30, 2002
and 2001 resulted from the increase in production volumes of 8.3 MMbbls in 2002. There were
also additional maintenance services required due to increasing production of formation water.
Royalties and Taxes
Royalties are collected quarterly, with the exception of Kumkol North, where royalties are paid
monthly, and can either be paid in cash or in kind. The choice of collection method rests with the
government of Kazakhstan and can vary from quarter to quarter. Where royalty is paid in cash, the
crude oil to which the relevant royalty percentage is applied is valued at the wellhead. Where royalty
is taken in kind, the government pays all related costs of transporting the crude from the CPF.
The total royalty expense for the nine months ended September 30, 2002 was $31.5 million,
which represented an effective overall percentage of 8.6%, compared with a royalty expense of
$27.5 million and an effective overall percentage of 8.3% for the comparable period in 2001.
The following table sets out the royalty paid in kind and in cash in the nine months ended
September 30, 2002 and 2001:
Nine Months Ended September 30, 2002 Nine Months Ended September 30, 2001
Royalty in Kind Cash Royalty Total Royalty Royalty in Kind Cash Royalty Total Royalty
($000’s)
23,151 8,353 31,504 17,783 9,716 27,499
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