Order Your Paper From the most reliable Essay writing Service. 



The size of oil and gas reserves of the Republic of Kazakhstan alone make national oil company of the country called KazMunaiGaz (KMG), an outstanding addition to any study of national oil companies. The country’s proven oil reserves are estimated between 9 billion and 17.6 billion barrels, including both land and offshore fields, as a potential producer of considerable influence. (“An Energy Overview of the Republic of Kazakhstan,” US Department of Energy, available from: http://www.fe.doe.gov/international/Russia_and_Central_Asia/kazkover.html#Oil ). When major new projects in Kazakhstan reached full production (probably by 2015), is expected to produce at least 3 million barrels of oil per day, which would make the country larger producer of oil compare to Norway, and it would be just behind Mexico and Iran. Even today Kazakhstan is in the list of one of the leading countries by producing 1.29 million barrels per day (Energy Information Administration. “Kazakhstan.” Country Analysis Briefs, 2006. Available online at http://www.eia.doe.gov/emeu/cabs/Kazakhstan/Oil.html. ). And almost anyone interested in investing in Kazakhstan is forced to work, in one form or another, with National Oil Company KazMunaiGaz (NC KMG).

NC KMG is also worthy of attention of those interested in the changing structure of the international petroleum industry. The company is largely a work in progress, one of the world’s youngest national oil companies, which could become a kind of model for other leading and evolving national oil and the gas companies, especially those of the former U.S.S.R., where is an important part of the world’s untapped oil and gas reserves are discovered.

KMG has some common similarity with other National Oil Companies (NOC) created in post-Soviet states such as Russia, Azerbaijan and Turkmenistan. However, the government of Kazakhstan has defined a much more aggressive development mission for NC KMG than Azerbaijan’s Government of SOCAR has for it. Unlike Russia, where there are two NOCs Rosneft and Gazprom, with competing interests, Kazakhstan has chosen to strengthen its holdings into one company. Yet, NC KMG has similarity with both Gazprom and Rosneft. The degree of vertical integration of Kazakh’s KMG is similar to that of Gazprom. Rosneft for the time being lacking the same transportation and refining capacity of KMG or Gazprom, the actions of another equally important similarity with the Kazakh business: both are trying to introduce western management styles in order to create internationally investing confidence. Unlike Rosneft, whose main asset of oil producing is Yuganskneftegaz, which was bought at auction after the seizure of Yukos, ( Peter Fin, “Russian Oil Firm Buys Mysterious Bid Winner,” Washington Post, December, 23 2004, A01) practically all of NC KMG assets were obtained in a fairly straight forward way. They were either acquired through purchase or by the transfer of a state held license to the company.

NC KMG is more likely to become a copy for other post-Soviet NOC than any another company, largely because of its development strategy is both more straight forward looking and better formulated than their counterparts. The declared intention of both Government of Kazakhstan and of KMG is that the company would become a large part of the public Corporation held, with the government ensuring the protection of its interests through the voting of its shares by a larger holding company as a Samruk which means “ Golden Phoenix” if translates from Kazakh to English, which created in 2006.

At the moment the relationship between KMG and the government of the Republic is getting quite close, which particularly mean the relationship between the family of President of Kazakhstan , Nursultan Nazarbayev, and the country’s oil industry. Those in key positions throughout the oil industry and government, including the different ministries and executive level positions directly associated with the oil industry, understand the challenge that the reform of the the industry presents. They realize that KMG should be transformed into an independent and transparent company in the remaining years of President Nazarbayev ‘s mandate, which ends in 2013-a company that no longer serves as an indirect instrument foreign policy or as a source of internal corruption.

This report will explain that what is KMG’s planning strategy, business plans and etc and how they are going to respond to the challenges which occurs in the company. Kazakhstan still confronts the task of creating constant investor confidence. The government’s treatment of the international oil companies (IOCs) will partly put pressure to this confidence level. Success will also depend on the evolution of the NC KMG itself, that’s mean the company should introduce a total transparency in all its upstream and downstream partner activities and whether it helps foster an atmosphere of competition in the service sectors that are associated with their main operations.

The company will have to decide whether to remain a production company, or simply be a stakeholder in every major country’s mining projects, and the main transit partner and a key player in the downstream market of Kazakhstan.

Whatever decision the company makes, it is may still have to reduce at least some of its assets, and try to be more focused on the acquisition of assets. Without this it would be difficult to maximize the value of the assets for NC KMG. They should turn the company to be more reliable partner for investors within the country. This requires the realization the process of political reform in Kazakhstan to provide a better expression of rights of investors and better legal protection to respond to situations in which investors believe their rights have been violated. Achieving these objectives will strengthen NC KMG’s position in the international oil industry and will help to set competitive advantage over other similar oil companies. ( Available at Baker institute: http://www.bakerinstitute.org/search?SearchableText=noc_kaz_Olcott.pdf )

The Importance Of Planning And Its Process.

When planning is done well, it creates a solid platform for the management of other functions which is the organizing – the allocating and organizing of resources to perform the tasks; leading-guiding the efforts of human resources to ensure a high level of performance tasks;

and control – surveillance on the achievements and taking necessary corrective action. The centrality of management planning is important to understand. In today’s demanding organization and persuading career environment is essential to stay one step ahead of the competition. This means always striving to be better at what you are doing and be action oriented.

The planning Process.

In the planning process, objectives identify the specific results or desired outcomes that one intends to achieve. The plan is a statement of action steps to be taken in order to accomplish the objectives. Five steps in the planning process are:

1. Define your objectives: Identify desired outcomes or results in very specific ways.

Know where you want to go; be specific enough that you will know you have arrived when you get there, or know how far off the mark you are at various points along the way.

2. Determine where you stand vis-a-vis objectives: Evaluate current accomplishments relative to the desired results. Know where you stand in reaching objectives; know what strengths work in your favour and what weaknesses may hold you back.

3. Develop premises regarding future conditions: Anticipate future events; Generates alternative “scenarios” for what may happen; identify for each scenario things that may help or hinder progress toward your objectives.

4. Analyze and choose among action alternatives: List and carefully evaluate possible actions. Choose the alternative(s) most likely to accomplish your objectives; describe step-by-step what must be done to follow the chosen course of action.

5. Implement the plan and evaluate results: Take action and carefully measure your progress towards objectives. Do what the plan requires, evaluate results, take corrective action, and revise plans as needed.

KazMunaiGaz’s Origins, Assets And Reserves

One thing is certain, the active use of fossil fuels in the country is key to any development strategy. President of the country has taken two use of oil and gas to boost the economy development in two ways, both through the development of a National Fund, which is investing state’s revenues from oil and gas and other key resources, into a fund that is loosely modeled on national oil fund in Norway.

This fund, established in 2001, is currently estimated at 14.1 billion U.S. dollars, and designed to provide long term support for the budget of the Republic of Kazakhstan and compensate irregular income caused by fluctuations in the world oil and gas market The other half of the equation is the conception of a strong national oil and gas company.

It is to have a dominant position in the hydrocarbon sector in the country. Because of this, finally , the Joint-Stock Company KazMunaiGaz National Company was founded under Decree of the President of the Republic of Kazakhstan No. 811 from February 20, 2002.

The opening of the industry of Kazakhstan after independence in 1991 brought many foreign investors who helped buy the industry. These investors signed Production Service Association’s (PSA) with NC KMG’s predecessor Kazakhoil, but the companies which produces things EMG (EmbaMunaigaz) and UMG (UzenMunaigaz), the main assets of KazMunaiGaz Exploration and Production (KMG E and P), were’t transferred to Kazakhoil until 1997.

On 16th March, 2004 the company was renamed Joint Stock Company KazMunai Gaz National Company. The company was founded with the goal of comprehensive development oil industry of the Republic to ensure a rational and efficient operation hydrocarbons, which in turn would contribute to social and economic development of Kazakhstan and its successful integration into the world of economy and oil industry. (KazMunaigaz (KMG), “Company History and Mission,” KazMunaiGaz website, http://www.kmg.kz/main.php?page=inc/posted&mid=4&showm=3&type=men. )

One of the main plans of Government of creation of NC KMG was that creation would help to achieve a variety of strategic objectives including improved financial and economic aspects of the company, moreover , additional to its hydrocarbon reserves and increasing production. The intention was to do so through reducing of costs and increasing cash flow, by increasing the efficiency of capital investment, to increase reserves through the exploration of new blocks for exploration and expansion of existing ones, the maximize their shares in existing companies. They were also to enhance the economic revenues to the Country through large oil and gas projects in which they had a partners, and also through the development of transportation opportunities available to Kazakhstan, and by helping the development of petrochemical companies in Kazakhstan. They were also charged with increasing the number the proportion of domestically produced goods, works and services which is supporting the country’s largest oil and gas projects. Additionally to this they assisted to increase the number of Kazakhstani officials directly involved in these projects.

JSC “NC KazMunaiGaz” is among three largest oil producers in Kazakhstan and has a minority in almost all major projects of oil and gas in the country which controls involvement in most projects initiated since 2000. The company employsover thirty-four thousand employees and reported revenue of $ 4.8 billion dollars in 2005 from its business activities. KMG has got control over twenty-five companies. ( KazMunaiGaz, “Structure of Assets,” KazMunaiGaz Website, http://www.kmg.kz/index.cfm?tid=22 )


The future shape of KMG is obviously unclear, not only for oil analysts industry, but for those working in KMG and the government of Kazakhstan as well. The company still should decide whether to remain a holding company, and even if they do still want to keep the role of operating ones in some projects . They will still have to decide how quickly and how completely sell its stakes in Kazakhstan’s various oil and gas projects. For the foreseeable future I think it will be difficult to compete with potential foreign investors, because of company’s poor technological base and luck of abilities in financial competitiveness of their operations.

According to the financial liquidity of the company, there probably will be an argument about reducing their holdings in certain projects. This will provide funds for foreign investments and and downstream, which could provide KMG with long term access to energy assets for the time when domestic production in Kazakhstan begins to decline.