Executive Summary

Note: The codes in parentheses denote the title codes used in the report body (Body) of the

REPORT hereinafter.

1. Process-facility Configuration (Chapter 3 and Chapter 4)

(1) Aromatics Project is located in the Aryrau Refinery, to produce 496,000 MT/Y (= 496

KMTA) of para-xylene (PX) and 133 KMTA of benzene (BZ) from the Reformate supplied

from the CCR Project, in which their capacity figures have been instructed by KMG (Figure

S-1-1). Out of the PX, 250 KMTA would be exported overseas, while the PX remainder

and the BZ would be sent to Petrochemical Complex.

(2) Petrochemical Complex is located in Karabatan, to produce and ship 188 KMTA of PTA,

200 KMTA of PET, 179 KMTA of EB and 200 KMTA of PVC, in which 246 KMTA of the

PX, and the BZ (133 KMTA) would be used as the raw-material (Figure S-1-2 to 3).

(3) Production processes used in the above-mentioned projects (Projects) are briefly explained

in the Chapter 3 of the Body.

2. Market Study of the Products (Chapter 1)

The markets at the year of 2012 are analyzed each in the Body with the related statistical data

represented by the UN’s.

2-1. Aromatics Project

Eastern and Western Europe, and China are named as the targeted markets of PX in view of the

balance between the consumption and the production capacity. Poland and Lithuania out of

Eastern Europe, and Belgium, Germany, and Spain out of Western Europe are the candidates

(Figure S-2-1 to 3).

Table S-2-1: Candidates for PX Exports (KMTA)

Forecasts for 2012 Eastern Europe Western Europe China

PX consumptions (A) 1,179 2,560 10,710

PX production capacities (B) 886 2,335 8,045

Balance (A)－(B) 293 225 2,665

Reformer

Deh

epta

nize

r

Liquid Extraction

Xyle

neSp

litte

r

Benzen & TolueneColumn

PX Recovery

PX Isomerization

TolueneTransalkylation

Xyle

neR

erun

C5+889

C7-336

BTX286

HDTNAPHTHA

1,000

BENZENE

RAFFINATE

LPG

FG4

C8+553

C8+1,153

C8A2,288

PX

C8A1,719

C8A1,785

C8+599

C6+885

C9+584

T7T7

T421

T428

FG19

BT32

H23BT 81

H219

C9541

FG71

FG

HEAVIES

H251

43

95

496

133

149

33Product StreamFG Fuel Gas StreamH2 Hydrogen Stream

Figure S-1-1: Process Flow of Aromatics Project (The Reformer is out of the scope of the Project)

S-2

Karabatan SitePetrochemical Complex Project

Atyrau Refinery Site

Aromatics Project

CCR Project1,000 CCR Reformate 889

149

Naphtha

43

PX Plant 496 Raffinate

Heavies

PX 246 BZ 133

KPI Project

Olefin Plant

Ethylene 41

48

Oxygen 40

EO/EG Plant

EG 68

PTA

PTA Plant 362

174

PET Plant 200

EB 179

PTA Export 188

179EB

Aktau ProjectSM Plant

PS Plant PS 300 PET 200

250PX Exports

Figure S-1-2: Process Flow of Petrochemical Complex (200 KMTA of PET, 188 KMTA of PTA and 179 KMTA of EB)

S-3

S-4

171

Caustic Soda 125

Rock Salt

KPI Project

Olefin Plant

Electrolysis Plant

Chlorine 117

EDC*536

EDC Plant

VCM Plant

VCM 202

PVC Plant

PVC 200

Ethylene 94

Petrochemical Complex (@Karabatan)

Oxygene 28

Figure S-1-3: Process Flow of Petrochemical Complex (200 KMTA of PVC)

Note: *536 KMTA of EDC is recycled in the VCM production of the balanced process.

S-5

-300

-200

-100

0

100

200

300

400

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

PX

Bal

ance

(KM

TA)

CalculatedExperienced Figure S-2-1: PX Balance* in East Europe

*Balance = (Production capacity) - (Inventory Charge) + (Imports) - (Exports)

-300

-200

-100

0

100

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

PX B

alan

ce (K

MTA

)

CalculateExperienced

Figure S-2-2: PX Balance* in West Europe

*Balance = (Production capacity) - (Inventory Charge) + (Imports) - (Exports)

-3,000

-2,500

-2,000

-1,500

-1,000

-500

02003 2004 2005 2006 2007 2008 2009 2010 2011 2012

PX Balance (KMTA)

Experienceed Calculated

Figure S-2-3: PX Balance* in China

*Balance = (Production Capacity) - (Consumption)

S-6

2-2. Petrochemical Complex

2-2-1. PET and PVC

The following markets are named as the candidate for the sales of the PET and the PVC:

Table S-2-2: Candidates for Sales of PET and PVC (KMTA)

Candidates PET PVC

Kazakhstan 44 KMTA 52 KMTA

Other Central Asian Countries 34 KMTA 29 KMTA

Russia 82 KMTA 65 KMTA

Other Countries 40 KMTA (Bulgaria, Romania, Serbia)

54 KMTA (Turkey, etc.)

Total 200 KMTA 200 KMTA

(1) Central Asian Countries represented by Kazakhstan, as the targeted market for PTE and PVC

We assume that their demand per head would follow those in Russia (Figure S-2-4 to 7).

Table S-2-3: Sales of PET and PVC in Central Asian Countries (KMTA)

Products Markets GDP Per capita

Annual PETDemands per head

Population Sales by Project (2012)

Kazakhstan $5,700 2.8 kg 15 MM 44 KMTA PET

Other CAC $1,000 0.73 kg 46 MM 34 KMTA

Kazakhstan $ 5,700 3.4 kg 15 MM 52 KMTA PVC

Other CAC $ 1,000 0.63 kg 46 MM 29 KMTA

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0 2,000 4,000 6,000 8,000GDP per capita (US$)

PET use per head (kg)

Kazakhstan (2003)

Russia (2005)

Russia (2012)

Expectationin Russia

Kazakhstan (2006)

Figure S-2-4: PET use per head versus GDP per capita in Russia and Kazakhstan

S-7

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0 2,000 4,000 6,000 8,000

GDP per capita (US$)

PET use per head (kg)

Russia (2005)

Russia (2012)

Expectation in Russia

CAC (2006)Kazakhstan (2003)

Kazakhstan (2006)

CAC (2003)

Fig S-2-5: PET use per head versus GDP per capita in

Russia and Central Asian Countries (CAC)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

2,000 3,000 4,000 5,000 6,000 7,000 8,000

GDP per capita (US$)

PV

C u

se p

er h

ead

(kg)

Russia (2003)

Russia (2006)

ExpectedRussia (2007)

ExpectedRussia (2012)

Expectation

Kazakhstan (2006)

Kazakhstan (2003)

ExpectedKazakhstan (2012)

Max. Case

Min. Case

Figure S-2-6: PVC Demand per head in Kazakhstan

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

GDP per capita (US$)

PV

C u

se p

er h

ead

(kg)

Kazakhstan (2006)

Kazakhstan (2003)CAC (2006)

CAC (2003)

ExpectedCAC (2012)

ExpectedCAC

RussianExperience

Figure S-2-7: PVC Demand per head in Central Asian Countries (CAC)

S-8

(2) Russia

1) Russia might be a targeted market for the PET because large magnitude capacities of projects

are scheduled to be completed their facility construction at 2008 (Figure S-2-8), in which 82

KMTA from the Project might enter the market. At 2006, Korea, China, Thailand accounted

for about 94 % of the total import value at 452 MM US$ by Russia.

0

100

200

300

400

500

600

700

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

(KMTA)

0

100

200

300

400

500

600

Capacity

Demands

Figure S-2-8 Demands and Productions of PET in Russia

2) At 2012, PVC would be imported at 270 KMTA to Russia where 65 KMTA from the Project

might occupy the PVC imports (Figure S-2-9).

655

40 30 20 10 10 10 10

269

885885

655640576568546492

1,1641,079

1,000

486583

738796

885950

113122

335

184285250250210150116

0

200

400

600

800

1,000

1,200

1,400

2004 2005 2006 2007 2008 2009 2010 2011 2012Year

(KMTA)

Production

Demand

Export

Import

Figure S-2-9: PVC Supply-demands in Russia

S-9

(3) Other markets

1) Bulgaria, Romania and Serbia out of the Eastern Europe would be targeted as the PET market

because the countries do not have a plan to produce PET and large quantities of the PET have

been imported from Asia.

Table S-2-4: PET Imports by Eastern Europe from Asian at 2006 (KMTA)

Exporters and their exports at 2006 (KMTA)

Importers China Korea Malaysia Thailand Total

Bulgaria 22 3 1 0 26

Czech 0 0 7 0 7

Romania 52 16 2 9 80

Serbia 7 1 1 0 8

Slovakia 0 0 0 0 0

Total 81 19 11 9 121

2) It is expected that at 2012, the Eastern Europe would be of PVC importers. Poland, Ukraine

and Turkey are named as the candidate out of the importer, and they imported from Asia at a

large quantity of PVC at 2006.

Table S-2-5: PVC Imports by Eastern Europe at 2006 (KMTA) PVC exports from Asia and Americas to East European Countries (2006) (KMTA)

Asia-Pacific Region China Korea Taiwan Other

Asians Total Latin

America United States

Poland 0.76 0.01 0.00 0.00 0.77 0.00 0.61

Ukraine 8.36 17.55 4.31 0.10 30.32 1.04 1.03

Turkey 118.34 22.50 26.44 69.97 238.26 41.42 1.71

2-2-2. PTA

Russia, Middle East and China are named as the targeted markets of PTA in view of the

balance between the consumption and the production capacity. (Figure S-2-11 to 13).

Table S-2-6: Candidates for PTA Exports

Forecasts for 2012 Russia Middle East China

PTA consumptions (A) 518 KMTA 1,915 KMTA 22,074 KMTA

PTA production capacities (B) 230 KMTA 1,470 KMTA 17,280 KMTA

Balance (A)－(B) 288 KMTA 445 KMTA 4,814 KMTA

S-10

0

100

200

300

400

500

600

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

(KMTA)

Experienced Expected

Figure S-2-10: PTA Balance* in Russia

*(Balance) = (Production) – (Inventory Charge) + (Import) – (Export))

-500

-400

-300

-200

-100

0

100

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

(KMTA)

Experienced Expected

Figure S-2-11: PTA Balance* in Middle East {* = (Production Capacity) – (Consumption)}

-7,000

-6,000

-5,000

-4,000

-3,000

-2,000

-1,000

0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

(KMTA)

Experienced Expected

Figure S-2-12: PTA Balance* in China {* = (Production Capacity) – (Consumption)}

S-11

3. Product Prices and Raw-material Unit Cost (Chapter 2)

3-1. Ex-factory prices of the Products

(1) Calculation Conditions

The ex-factory prices are calculated as follows:

(Ex-factory Price) = (Referred Price) – (Allowance) – (Tariff)

- The referred prices are set applying the latest-year figures of contract prices such as EUCP or

the trade unit value gotten with the calculation dividing the trade value by the quantity

thereof based on the trading statistic data such as “UN Comtrade”. In the Body of the report

such referred prices are explained with the statistic data.

- The allowance of 10 % is applied to the calculation considering that the said latest-year

figures are located at the highest level in the price history.

- The tariffs are calculated each referring to those indicated by KMG as follows:

Table S-3-1: Tariffs informed by KMG for train transportation Distance Tariff Origin Place Destination Purpose

(km) (KZT/MT) (US$/MT)

Atyrau Karabatan Domestic Transportation 40 298.3 2.32

Atyrau Novorossiysk Export 54.97

Atyrau Dostyk Export 3,218 13,609.40 106.03

Karabatan Aktau Domestic Transportation 798 1,052.20 8.2

Karabatan Aksaraiskayo II Export 363 2,295.70 17.89

Karabatan Dostyk Export 3,258 13,609.40 106.03

(2) Summary

1) Aromatics Project

Table S-3-2: Ex-factory prices of Products made by Aromatics Project

Products Volumes Ex-factory

Prices Remarks

Raffinate 149 KMTA 342 US$/MT = 43,860 KTZ/MT (@ 0.0077912 US$/KZT)

BZ 133 KMTA 738 US$/MT

PX 496 KMTA 962 US$/MT

Heavies 43 KMTA 468 US$/MT = 60,018 KTZ/MT (@ 0.0077912 US$/KZT)

Total 821 KMTA

S-12

2) Petrochemical Complex

Table S-3-3: Ex-factory prices of Products made by Petrochemical Complex

Products Volumes Ex-factory Prices

PET + EB + PVC PET + EB PVC

PTA 189 KMTA 693 US$/MT Yes Yes

PET 200 KMTA 1,009 US$/MT Yes Yes

EB 179 KMTA 893 US$/MT Yes Yes

PVC 200 KMTA 940 US$/MT Yes Yes

NaOH 126 KMTA 289 US$/MT Yes Yes

Total 894 KMTA

(3) Calculation of ex-factory prices

Table S-3-4: EX-factory prices of PX produced in Project

Destination Volumes(KMTA)

Referred Prices

(US$/MT) (A)

Allowance(B)

(A) x 10%

Tariff (US$/MT)

(C)

Ex-factoryPrices

(A)-(B)-(C)Karabatan (for PTA production) 246 1,140

(China TUV) 114 2 1,024

Western Europe (Belgium, Germany, Spain)

20 1,150 (EUCP) 115 85 950

Eastern Europe (Poland, Lithuania) 120 1,150

(EUCP) 115 75 960

China 110 1,140 (China TUV) 114 200 826

Total 496 *TUV =Trade Unit Value Average 962

Table S-3-5: EX-factory prices of BZ produced in Project

Destination Volumes(KMTA)

Referred Prices

(US$/MT) (A)

Allowance(B)

(A) x 10%

Tariff (US$/MT)

(C)

Ex-factoryPrices

(A)-(B)-(C)Karabatan (for EB production) 133 822

(China TUV) 82 2 738

Total 133 *TUV =Trade Unit Value Average 738

Table S-3-6: EX-factory prices of PET produced in Project

Destination Volumes(KMTA)

Referred Prices

(US$/MT) (A)

Allowance(B)

(A) x 10%

Tariff (US$/MT)

(C)

Ex-factoryPrices

(A)-(B)-(C)Kazakhstan 44 1,200* 120 15 1,065 Other Central Asian Countries 34 1,200* 120 140 940

Russia 82 1,200* 120 70 1,010 Eastern Europe Countries (Bulgaria, Romania, etc.) 40 1,200* 120 75 1,005

Total 200 * Trade Unit Value Average 1,009

S-13

Table S-3-7: EX-factory prices of PVC produced in Project

Destination Volumes(KMTA)

Referred Prices

(US$/MT) (A)

Allowance(B)

(A) x 10%

Tariff (US$/MT)

(C)

Ex-factoryPrices

(A)-(B)-(C)Kazakhstan 52 1,170* 117 15 1,038 Other Central Asian Countries 29 1,170* 117 140 913

Russia 65 1,170* 117 70 983

Turkey 54 970* 97 65 808

Total 200 * Trade Unit Value Average 940

Table S-3-8: EX-factory prices of NaOH produced in Project

Destination Volumes(KMTA)

Referred Prices

(US$/MT) (A)

Allowance(B)

(A) x 10%

Tariff (US$/MT)

(C)

Ex-factoryPrices

(A)-(B)-(C)Kazakhstan 56 300* 30 15 255

East Europe Countries 70 435* 44 75 317

Total 126 * Trade Unit Value Average 289

Table S-3-9: EX-factory prices of EB produced in Project

Destination Volumes(KMTA)

Referred Prices

(US$/MT) (A)

Allowance(B)

(A) x 10%

Tariff (US$/MT)

(C)

Ex-factoryPrices

(A)-(B)-(C)Aktau 179 1,003* 100 10 893

Total 179 * Trade Unit Value Average 893

Table S-3-10: EX-factory prices of PTA produced in Project

Destination Volumes(KMTA)

Referred Prices

(US$/MT) (A)

Allowance(B)

(A) x 10%

Tariff (US$/MT)

(C)

Ex-factoryPrices

(A)-(B)-(C)Russia 150 877* 88 70 719

China 39 879* 88 200 591

Total 189 * Trade Unit Value Average 693

Figure S-3-1 to 7 illustrates the Unit Prices of the Products and their volumes on the map, in

which the Unit Price is calculated at 90% of the Referred Price.

Figure S-3-1 : Product PX : Targeted Markets (Unit Price x Volume) and Tariffs

Note: (Ex-factory price) = (Unit Price) – (Tariff), (Unit Price) = (Refereed Price) x 90%

Western Europe(Belgium, Germany, Spain)

1,035 $/T x 20 KMTA

Eastern Europe(Poland, Lithuania)

1,035 $/T x 120 KMTA

China1,026 $/T x 110 KMTA

Karabatan(PTA-production use)1,026 $/T x 246 KMTA Tariff: 2 $/T

Tariff: 200 $/T

Tariff: 85 $/T

Tariff: 75 $/T

S-14

Figure S-3-2: Product BZ : Targeted Markets (Unit Price x Volume) and Tariffs

Note: (Ex-factory price) = (Unit Price) – (Tariff), (Unit Price) = (Refereed Price) x 90%

Tariff: 2 $/TKarabatan(EB-production use)740 $/T x 133 KMTA

Tariff: 2 $/T

S-15

Figure S-3-3: Product PET: Targeted Markets (Unit Price x Volume) and Tariffs

Note: (Ex-factory price) = (Unit Price) – (Tariff), (Unit Price) = (Refereed Price) x 90%

Eastern Europe Countries(Bulgaria, Romania, Czech, Serbia)

1,080 $/T x 40 KMTA

Tariff: 75 $/T

Kazakhstan(Domestic Market)

1,080 $/T x 44 KMTA

Tariff: 15 $/T

Russia1,080 $/T x 82 KMTA

Tariff: 70 $/T

Other CentralAsian Countries

1,080 $/T x 34 KMTA

Tariff: 140 $/T

S-16

Figure S-3-4: Product PVC: Targeted Markets (Unit Price x Volume) and Tariffs

Note: (Ex-factory price) = (Unit Price) – (Tariff), (Unit Price) = (Refereed Price) x 90%

Eastern Europe Countries(Bulgaria, Romania, Czech, Serbia)

873 $/T x 0 KMTA

Tariff: 75 $/T

Russia1,053 $/T x 65 KMTA

Tariff: 70 $/T

Tariff: 15 $/T

Kazakhstan(Domestic Market)

1,053 $/T x 52 KMTA

Turkey873 $/T x 54 KMTA

Tariff: 65 $/T

Tariff: 140 $/T

Other CentralAsian Countries

1,053 $/T x 29 KMTA

S-17

Figure S-3-5: Product NaOH (caustic soda): Targeted Markets (Unit Price x Volume) and Tariffs

Note: (Ex-factory price) = (Unit Price) – (Tariff), (Unit Price) = (Refereed Price) x 90%

Eastern Europe Countries391 $/T x 70 KMTA

Tariff: 75 $/TTariff: 15 $/T

Kazakhstan(Domestic Market)270 $/T x 56 KMTA

S-18

Figure S-3-6: Product EB: Targeted Markets (Unit Price x Volume) and Tariffs

Note: (Ex-factory price) = (Unit Price) – (Tariff), (Unit Price) = (Refereed Price) x 90%

Aktau(SM/PS Plant)

903 $/T x 179 KMTA

Tariff: 10 $/T

S-19

Figure S-3-7: Product PTA: Targeted Markets (Unit Price x Volume) and Tariffs

Note: (Ex-factory price) = (Unit Price) – (Tariff), (Unit Price) = (Refereed Price) x 90%

Russia789 $/T x 150 KMTA

China791 $/T x 39 KMTA

Tariff: 70 $/T

Tariff: 200 $/T

S-20

S-21

3-2. Prices of Raw-materials to be procured

(1) Summary

1) Aromatics Project

Table S-3-11: Reformate Price

Feeds Volumes Unit Costs Remarks

Reformate 889 KMTA 342 US$/MT = 43,860 KTZ/MT (@ 0.0077912 US$/KZT)

2) Petrochemical Complex

Table S-3-12: Raw-material Prices Study Cases Products Volumes Unit Costs

All PET + EB PVC

PX 246 KMTA 1,026 US$/MT (= 1,024 + 2)* Yes Yes

BZ 133 KMTA 740 US$/MT (= 738 + 2)* Yes Yes

Ethylene See Right Columns

927 US$/MT (= 1,030 x 90%)**

Yes 183 KMTA

Yes 89 KMTA

Yes 94 KMTA

Acetic Acid 22 KMTA 376 US$/MT (= 418 x 90%)** Yes Yes

Salt Rock 172 KMTA 30 US$/MT Yes Yes

Total 756 KMTA

*: (Ex-factory Price) + (Tariff), ** (Trade Unit Value) x 90 %

(2) PX and BZ

It is necessary to adjust both the PX and BZ prices in view of the profitability between the two

projects of the Aromatics Project and the Petrochemical Complex.

(3) Ethylene

1) The Project refers to the data of sales prices of 1,030 US$/MT experienced among Germany,

Belgium, Netherlands and France at the year of 2006 in view of land business and not maritime

one

2) It is noted that the production cost of ethylene that is produced from ethane, ranges from

110$/MT to 200$/MT in the cases of Saudi Arabia, Qatar and Iran.

3) It is necessary to minimize the procurement cost in order to increase the profitability of the

Petrochemical Complex.

S-22

4. Utility and Offsite Facilities (Chapter 5)

4-1. Aromatics Project in Atyrau Oil Refinery

(1) Utility Requirement

Table S-4-1: Utility Requirement for BZ and PX Production

(BZ; 133 KMTA PX; 496 KMTA)

Utilities Unit Consumption Utilities Unit Consumption

HP STM t/h 92.5 Electric Power kW 10,705

MP STM t/h -31.0 Fuel Gas (C) MMkcal/h 195.5

LP STM t/h 2.8 Fuel Gas (P) MMkcal/h -128.9

Condensate t/h -96.4 Nitrogen Nm3/h 30

BFW t/h 40.7 Instrument Air Nm3/h 500

Cooling Water M3/h 3,338 Refinery Air Nm3/h 9

(C); Consumption, (P); Production

(2) Utility Facility Plan

Because BZ and PX Production facilities require is no special utility for which is scarcely

utilized for general oil refining process, the most of utility will be supplied from existing Atyrau Oil

Refinery by the cost and fee basis payment. However, the existing Oil Refinery has not a high

pressure steam source to supply to BZ and PX Production facilities. Also, as for electricity and

cooling water it has not surplus capacity to supply them to BZ and PX Production facilities.

Accordingly, the utility facility plan including consumption by OSBL facilities for BZ and PX

Production might be one as shown bellow.

- Boilers 75 t/h×2 sets at 42 ata, and 420 ℃

- Demineralizers 50 t/h×2 sets

- Cooling Water System 5,000 t/h×1 sets

- Substation to receive and Distribute Electricity 15,000 KW

(3) Offsite Facility Plan

1) Railway Facilities

Modification of existing railway system might be required for transportation of BZ and PX

from BTX extraction unit to Karabatan aromatics plant. In order to mitigate the congestion of

railway operation at Karabatan, the possibility of tank lorry application for BZ and PX

transportation is simultaneously under study.

S-23

2) Loading Facilities for BZ and PX

The closed type loading facility, provided with vapor recovery system, is planed for shipping

of BZ and PX respectively without harmful vapor emission into the air. BZ will be shipped by 3

sets of loading arm and PX by 12 sets.

3) Storage Tanks

For BZ, 3 sets of each 1,500 Kl tank, provided with steam coil jacket and vapor recovery and

nitrogen blanket system, will be installed.

For PX, 4 sets of each 3,000 Kl tank, provided with steam coil jacket and vapor recovery and

nitrogen blanket system, will be installed.

4) Miscellaneous

As well as in case of utility facility plan, it is envisaged that following miscellaneous offsite

facilities might be integrated into that of existing facilities in Atyrau Oil Refinery. Needless to

say the expense to operate these facilities shall be shared by BZ and PX production faciliyies in

proportion to its utilization.

- Flare Stack

- Waste Water Treating Facilities

- Warehouse for consumable subsidiary

materials and maintenance materials

- Repair Shop

- Gateman Substation

- Hangar for Fire Fighting Materials and

Vehicles

- Laboratory

- Administrative Building

4-2. Petrochemical Complex in Karabatan Site

(1) Utility Requirement

Table S-4-2 Utility Requirement for Aromatic Complex in Karabatan

EB (179KMTA), PTA (362KMTA), PET (200KMTA) and PVC (200 KMTA)

Utilities EB PTA PET PVC Total

HP-STM t/h

MP-STM t/h 55 55

LP-STM t/h -31 123 -2 90

Cooling Water m3/h 28 16,000 3,948 5,397 19,565

Process Water m3/h 122 180

BFW m3/h 35 8 43

S-24

Table S-4-2 Utility Requirement for Petrochemical Complex in Karabatan (Continued)

EB (179KMTA), PTA (362KMTA), PET (200KMTA) and PVC (200 KMTA)

Utilities EB PTA PET PVC Total

BFW m3/h 35 8 43

Potable Water m3/h 10

Electricity KW 205 18,000 7,987 56,000 82,192

Fuel Gas MMkcal/h 22,000 13,700 18,000 53,700

Nitrogen Nm3/h 800 800

Instrument Air Nm3/h 100 300 300 300 1,000

Refinery Air Nm3/h 1,500

(2) Utility Facility Plan of Petrochemical Complex

In this Study, the Petrochemical Complex will be self-sufficient for all utilities excluding fuel

gas and industrial water. However, it should be noted that joint possessing and operating the

utility facilities with the nearby Olefin and Polyolefin Complex will be more preferable to cut both

of the construction cost and operating cost. It is recommendable to adjust the utility facility plan

with that of Olefin and Polyolefin Complex.

1) Steam and Power Generation System

Judging from small demand of steam and enormous demand of electricity, cogeneration

system of steam and power by gas turbine will be the most recommendable for Petrochemical

Complex in Karabatan Site. In comparison with gas turbine cogeneration system of steam and

power, BTG cogeneration system requires more fuel and cooling water.

- Gas Turbine; 33,000 KW x 3 sets

- Heat Recovery Boiler; 42 ata x 420 ℃ x 60 t/h x 3 sets

- Steam Turbine Generator; 9,000 KW x 1set (Extraction type)

- Fuel Consumption; 340 MMkcal /h

- Cooling Water Requirement; 3,000 m3/h

2) Water Treating System

- Clarifier/Filter 500 m3/h x 2 sets with 2 sets of 2,000 Kl tanks

- Demineralizing Unit 150 m3/h x 3 sets with 2 sets of 2,000 Kl tanks

- Silica Polisher 150 m3/h x 2 sets with 2 sets of 2,000 kl tanks

- Potable Water System 10 m3/h x 2 sets with 2 sets of 100 Kl tanks

S-25

3) Cooling Water System

- Cooling Tower 10,000 m3/h x 4 sets (Induced Draft Type)

- Circulation Pump 10,000 m3/h x 30 m x 6 sets

- Side Stream Filter 1,000 m3/h x 1 set

- Cooling Water Make-up 850 m3/h (Incl. make-up for 180 m3/h blow)

4) Fuel Gas System

- Sphere holder 500 m3 x 1 set

- Fuel Gas Compressor 30,000 Nm3/h (≑ 20 ata.) x 1 set

5) Compressed Air System

- Air Compressor 1,500 Nm3/h 2 sets (2 stage compression)

- Drier 1,500 Nm3/h 1 set

- Compressed Air Holder 500 m3 x 1 set for instrument air

6) Fire Fighting System

- F.F.W. Pump 600 m3/h x 120m x 2 sets of (One diesel engine driven)

- Foam Maker for Flannable Material Storage Tank

(3) Offsite Facility Plan

As well as utility facility plan, offsite facility plan of Petrochemical Complex should be also

adjusted with that of Olefin and Polyolefin’s one for rationalization in construction and operation.

Especially, shipping facilities including the functional structure of freight terminal and operational

management of the freight cars should be carefully studied with Olefin and Polyolefin Complex in

order to mitigate the congestion in products shipping facilities.

1) Railway Extension

At a minimum requirement, excluding that of Olefin and Polyolefin Complex, double track

railway of 3 km distance between Karabatan station and Petrochemical Complex might be

necessary

2) Loading/Unloading Facilities for Liquid Feedstock and Product

Unloading System; The closed type unloading facilities for BZ and PX with nitrogen

S-26

blanketing system shall be respectively installed.

Loading System; The closed type loading facility for EB with vapor recovery system shall

be installed.

3) Unloading Facility for Solid Feedstock

Unloading system; Solid unloading system for rock salt, which consist of dumping pit,

conveyors and storages, shall be installed.

4) Unloading Facilities for PET and PVC Products

Each unloading system for PET and PVC products will include following components

- Pellet Weighing System with Pneumatic Transportation Apparatus

- Pellet Silos with Pneumatic Transportation Apparatus

- Pellet Bagging System

- Bag Palletizing System

- Warehouse for Product bag Pallets (See item (7) in details)

- Container Yard for Product Shipping

5) Storage Tanks

Storage tanks for feedstock and products shall be installed

- Benzene Tank 1,000 Kl×3 sets with steam coil jacket and vapor recovery and nitrogen

blanket system

- PX Tank 3,000 Kl×3 sets with steam coil jacket and vapor recovery and nitrogen

blanket system

- EB Tank 1,000 Kl×3 sets with vapor recovery and nitrogen blanket system

- Fuel Oil Tank 2,000 Kl×3 sets with steam coil jacket

6) Flare Stack;

One elevated flare stack provided with accessories including seal drum

7) Waste Water Treating Facilities

After harmless treatment such as neutralization of acids and alkalis within the each process

unit, waste water finally goes into settling basin for biological stabilization. Harmless waste

S-27

water without salt such as blow out water of cooling tower might be utilized for irrigation.

8) Warehouse;

- Product Warehouse Automated warehouse for PTA; 20mw×70ml×20mh

Automated warehouse for PET; 20mw×70ml×20mh

Automated warehouse for PVC; 20mw×70ml×20mh

- Common Warehouse Warehouse for consumable subsidiary materials such as catalysts and

lube oil and maintenance materials including spare parts;

20mw×50ml ×6mh

9) Repair Shop; Equipped with fundamental machine tools, testing equipment and overhead

crane; 30mw×50ml×15mh

10) Gateman Substation;

For security of the plant, gate has to be managed by full time shift gatemen and daytime

gatemen

11) Hangar for Fire Fighting Materials and Vehicles; 15mw ×12ml×8mh

Fire fighting materials and vehicles might be jointly managed neighboring plants including

olefin and polyolefin complex to share the preparatory expense against the accidental fire.

12) Laboratory

The members responsible for laboratory consist of both daily and shift staffs for quality

control of feed stocks, intermediate and final products. 15mw 25ml 2 floors

13) Administrative Building;

Total floor space of 4,500 m2 for preliminarily estimated 200 daytime employees.

25mw×60ml×3 floors

5. Economic Conditions (Chapter 6)

5-1. Project Costs

The project costs are currently calculated at an accuracy of 40 % at the maximum, which has

been agreed with KMG.

S-28

5-1-1. Aromatics Project

The construction period of the ISBL and OSBL is estimated at 36 months in a normal state;

however, it might extend to 48 months in the case where such a tight state would continue.

Table S-5-1: Project Costs for Aromatics Project

Production-cost Item (MM US$) Note

- Onsite Portion of EPC (ISBL) 600 Including royalty & catalyst charge.

- Offsite Portion of EPC (OSBL) 360 Utility and offsite facilities

EPC Cost 960

Preproduction Expenditures 30 3 % of EPC Cost

Initial Working Capital 10

Interest during Construction (IDC) Later

Project Cost 1,000 + IDC

5-1-2. Petrochemical Complex

The construction period of the ISBL and OSBL is estimated at 42 months in a normal state;

however, it might extend to 48 months in the case where such a tight state would continue.

Table S-5-2: Project Costs for Petrochemical Complex

(MM US$)

Production-cost Item Case 1

All Case 2

PET + EB Case 3

PVC

- Onsite Portion of EPC (ISBL) 1,020 600 430

- Offsite Portion of EPC (OSBL) 610 360 260

EPC Cost 1,630 960 690

Preproduction Expenditures 50 30 20

Initial Working Capital 10 10 10

Interest during Construction (IDC) Later Later Later

Project Cost 1,690 + IDC 1,000 + IDC 720 + IDC

S-29

5-2. Balance between Product Revenues and Raw-material Costs

Note: Here, the “Unit Price” means the ex-factory price for the Product, and the purchasing

price for the Feed.

5-2-1. Aromatics Project

Table S-5-3-1: Expected Revenues and Raw-material Costs of Aromatics Project

Volumes (KMTA)

Unit Prices (US$/MT)

Revenue / Cost (MM$)

Feed Reformate(C5+) 889 342 304

Cost Total 889 304

Products Raffinate 149 342 51

BZ 133 738 98

PX 496 962 477

Heavies 43 468 20

Revenue Total 821 646

Product Revenue – Feed Cost 342

5-2-2. Petrochemical Complex

Table S-5-3-2: Expected Revenues and Raw-material Costs of Petrochemical Complex

Case 1: PET + EB + PVC

Feed PX 246 1,026 252BZ 133 740 98Ethylene 183 927 170Acetic Acid 22 376 8Salt Rock 171 30 5Cost Total 755 533

Product PTA 189 693 131PET 200 1,009 202EB 179 893 160PVC 200 940 188NaOH 125 289 36Revenue Total 893 717

Revenue - Feed 184

Feed andProduct

Volumes(KMTA)

Ex-factory Price(US$/MT)

Revenues or Costs(MM$)

S-30

Case 2: PET + EB

Feed PX 246 1,026 252BZ 133 740 98Ethylene 89 927 83Acetic Acid 22 376 8Cost Total 490 441

Product PTA 189 693 131PET 200 1,009 202EB 179 893 160Revenue Total 568 493

Revenue - Feed 52

Revenues or Costs(MM$)

Feed andProduct

Ex-factory Price(US$/MT)

Volumes(KMTA)

Case 3: PVC

Feed Ethylene 94 927 87Salt Rock 171 30 5Cost Total 265 92

Product PVC 200 940 188NaOH 125 289 36Revenue Total 326 224

Revenue - Feed 132

Ex-factory Price(US$/MT)

Feed andProduct

Ex-factory Price(US$/MT)

Volumes(KMTA)

The profitability of the Petrochemical Complex is much worse than that of the Aromatics

Project. In order to improve the profitability it is necessary to make studies including reduction of

the costs for raw-material such as PX, BZ and ethylene.

5-3. Utilities Quantities and Costs

(1) Aromatics Project

Table S-5-4 Utility Requirements and Costs for Aromatics Project

Item of Expense Description

Electricity 0.06 $/KWH 11,000 KW 5,280 Totally purchasedHigh Pressure Steam 6.2 $/ton 93 ton/H 4,613Middle Pressure Steam 6.2 $/ton -31 ton/H -1,538Low Pressure Steam 6.2 $/ton 3 ton/H 149Cooling Water 0.06 $/ton 3,300 ton/H 1,584Condensate 2.22 1,000$/Y -96 ton/H -1,705Process Water/BFW 2.22 1,000$/Y 41 ton/H 728

Fuel Gas (Natural Gas) 0.004 $/MMcal 67 MMcal/H 2 Balance betweenConsumption and Production

Inert Gas 0.02 $/Nm3 30 $/Nm3 5Instrument Air 0.006 $/Nm3 500 $/Nm3 24Refinery Air

Total 9,142

Cost(1,000$/Y)Unit Price Consumption

Nil.

S-31

(2) Petrochemical Complex

Table S-5-5-1: 362 KMTA -PTA Production: Utility Requirements and Costs

Item of Expense Description

Electricity 0.06 $/KWH 18,000 KW 8,640 Totally purchasedHigh Pressure Steam 6.2 $/ton 0 ton/H 0Middle Pressure Steam 6.2 $/ton 0 ton/H 0Low Pressure Steam 6.2 $/ton 120 ton/H 5,952Cooling Water 0.06 $/ton 16,000 ton/H 7,680Process Water/BFW 2.22 1,000$/Y 0 ton/H 0Fuel Gas 0.004 $/MMcal 0 MMcal/H 0Natural Gas 0.004 $/MMcal 22,000 MMcal/H 704

Inert Gas 0.02 $/Nm3 0 Byproduct of oxygen production

Instrument Air 0.006 $/Nm3 300 $/Nm3 14Refinery Air 0Vehicle Fuel 1,000 $/Kl 33 Kl/Y 33 Forklift

Total 23,023

Nil.

Cost(1,000$/Y)Unit Price Consumption

Nil.

Table S-5-5-2: 200 KMTA -PET Production: Utility Requirements and Costs

Item of Expense Description

Electricity 0.06 $/KWH 8,000 KW 3,840 Totally purchasedHigh Pressure Steam 6.2 $/ton 0 ton/H 0Middle Pressure Steam 6.2 $/ton -2 ton/H -99Low Pressure Steam 6.2 $/ton 0 ton/H 0Cooling Water 0.06 $/ton 4,000 ton/H 1,920Process Water/BFW 2.22 1,000$/Y 0 ton/H 0Fuel Gas 0.004 $/MMcal 0 MMcal/H 0Natural Gas 0.004 $/MMcal 13,700 MMcal/H 438

Inert Gas 0.02 $/Nm3 0 Byproduct of oxygen production

Instrument Air 0.006 $/Nm3 300 $/Nm3 14Refinery Air 0Vehicle Fuel 1,000 $/Kl 33 Kl/Y 33 Forklift

Total 6,146

Nil.

Cost(1,000$/Y)Unit Price Consumption

Nil.

Table S-5-5-3: 179 KMTA -EB Production: Utility Requirements and Costs

Item of Expense Description

Electricity 0.06 $/KWH 200 KW 96 Totally purchasedHigh Pressure Steam 6.2 $/ton 0 ton/H 0Middle Pressure Steam 6.2 $/ton 0 ton/H 0Low Pressure Steam 6.2 $/ton -31 ton/H -1,538Cooling Water 0.06 $/ton 28 ton/H 13Process Water/BFW 2.22 1,000$/Y 35 ton/H 622Fuel Gas 0.004 $/MMcal 0 MMcal/H 0Natural Gas 0.004 $/MMcal 0 MMcal/H 0Inert Gas 0.02 $/Nm3 0 Byproduct of oxygen productionInstrument Air 0.006 $/Nm3 100 Nm3/H 5Refinery Air 0Vehicle Fuel 1,000 $/Kl 0 Kl/Y 0 Forklift

Total -802

Nil.

Cost(1,000$/Y)Unit Price Consumption

Nil.

S-32

Table S-5-5-4: 200 KMTA -PVC Production: Utility Requirements and Costs

Item of Expense Description

Electricity 0.06 $/KWH 56,000 KW 26,880 Totally purchasedHigh Pressure Steam 6.2 $/ton 0 ton/H 0Middle Pressure Steam 6.2 $/ton 55 ton/H 2,728Low Pressure Steam 6.2 $/ton 0 ton/H 0Cooling Water 0.06 $/ton 5,400 ton/H 2,592Process Water/BFW 2.22 1,000$/Y 120 ton/H 2,131

Fuel Gas 0.004 $/MMcal 18,000 MMcal/H 576 Balance between consumptionand production

Natural Gas 0.004 $/MMcal 0 MMcal/H 0Inert Gas 0.02 $/Nm3 800 Nm3/H 0 Byproduct of oxygen productionInstrument Air 0.006 $/Nm3 300 Nm3/H 14Refinery Air 0Vehicle Fuel 1,000 $/Kl 33 Kl/Y 33 Forklift

Total 34,954

Nil.

Cost(1,000$/Y)Unit Price Consumption

5-4. Manpower Required

We calculate the manpower required for running the Projects. The Petrochemical Complex

might establish a company of the Special Purpose Company (SPC). It is necessary to confirm the

manpower payment especially for the home-office listed in Table 5-6-3.

Table S-5-6-1: Manpower required for Aromatics Project

Required

Administrative Personnel 20 Production Section

- Production Manager / Sub-manager 2

- Production Control 2

- Operation Staff 3

- Shift Operator (4 shifts x 10) 40

Subtotal 47

Technical / Maintenance Section

- Manager / Sub-manager / Secretary 3

- Process Engineer 2

- Mechanical Engineer 4

- Maintenance Technician 27

Subtotal 36

Total 103

S-33

Table S-5-6-2: Manpower required for Petrochemical Complex

Production PET EB PVC Total

Administrative Personnel 12 5 16 33 Production Section

- Shift Operator (4 shifts) 88 12 72 172

- ProductionManagement 9 3 9 21

- Shipping Management 10 3 10 23 Subtotal 107 18 91 216 Technical / Maintenance Section

- Manager / Sub-manager / Secretary 3 1 4 8

- Process Engineer 2 1 2 5

- Mechanical Engineer 3 1 4 8

- Maintenance Technician 26 6 32 64 Subtotal 34 9 42 85

Total 153 32 149 334

Table S-5-6-3: Manpower for Head Office

(Company for Petrochemical-complex Project)

President 1

Auditor 1

Director 3

General Affairs 10

Personnel Affair 2

Accountant 2

Sales 6

Total 25

6. Project Economy (Chapter 7)

KMG can settle the following parameters in order to improve the profitability:

(1) The unit costs for purchasing of PX and BZ as the raw-materials;

(2) The volume of PTA to be exported, and;

(3) The volumes of PET and PVC to be produced.

6-1. Unit costs for purchasing of PX and BZ

We calculate for the following cases the internal rate of return (IRR) of the Project in a

preliminary cash flow:

S-34

Table S-6-1: Explanation of Cases for Petrochemical Complex

Outline of Schemes Unit costs

for purchasing of PX and BZ Case 1A A scheme integrated with the Aromatics

Project to produce PET, PVC and EB. Both the Aromatics Project and the Petrochemical Complex have the same rate of IRR.

Case 2A A scheme integrated with the Aromatics Project to produce PET and EB.

Both the Aromatics Project and the Petrochemical Complex have the same rate of IRR.

Case 3 A scheme, of standing alone, to produce PVC.

The scheme has no relation between PX and BZ.

Table S-6-2: Products and Feeds made in Petrochemical Complex

Case 1A: PET + EB + PVC (integrated with Aromatics Project)

Feed Reformate (C5+) 889 342 304Ethylene 183 927 170Acetic Acid 22 387 8Salt Rock 171 30 5Cost Total 1,265 487

Product PX (Exporting) 250 900 225Raffinate 149 342 51Heavies 43 468 20PTA 189 693 131PET 200 1,009 202EB 179 893 160PVC 200 940 188NaOH 125 222 28Revenue Total 1,335 1,005

Revenue - Feed 518

Volumes(KMTA)

Unit Price(US$/MT)

Revenues or Costs(MM$)Products

Case 2A: PET + EB (integrated with Aromatics Project)

Feed Reformate (C5+) 889 342 304Ethylene 89 927 83Acetic Acid 22 376 8Cost Total 1,000 395

Product PX (Exporting) 250 900 225Raffinate 149 342 51Heavies 43 468 20PTA 189 693 131PET 200 1,009 202EB 179 903 160Revenue Total 1,010 789

Revenue - Feed 394

Revenues or Costs(MM$)Products Unit Price

(US$/MT)Volumes(KMTA)

Case3: PVC (Standing alone)

Feed Ethylene 94 927 87Salt Rock 171 30 5Cost Total 265 92

Product PVC 200 940 188NaOH 125 222 28Revenue Total 326 216

Revenue - Feed 124

Revenues or Costs(MM$)Products Unit Price

(US$/MT)Volumes(KMTA)

S-35

Table S-6-3 illustrates the profitability for the cases, in which the PVC production of the Case

3 makes the profitability worse.

Table S-6-3: Profitability of Case 1 A, Case 2A and Case 3, before tax

IRR NPV @ 10.5% Equity Payout Remarks

(%) (MM$) (years) Figures of Body

Case 1A 1.7 -1,766 11 Table 7-3

Case 2A 2.7 -1,192 11 Table 7-4

Case 3 -0.9% -590 12 Table 7-5

PX and BZ would have the prices respectively, 567$/T and 409$/T in the case where the

Petrochemical Complex of standing alone has the rate of 2.7% as the IRR (Case 4, of Table 7-8).

Table S-6-4: Profitability of Case 4, before tax

IRR NPV @ 10.5% Equity Payout Remarks

(%) (MM$) (years) Figures of Body

Case 4 2.7 -599 11 Table 7-8

6-2. Volume of PTA to be exported

The profitability of Case 4 would be at the best in the case where the PTA is not exported.

Table S-6-5: Changing of Profitability (Case4)

corresponding to reducing of PTA exports, before tax

PTA ProductionPTA Production Capacity KMTA 362 290 217 173PTA Exporting KMTA 189 117 44 0Russia (719$/T) KMTA 150 117 44 0China (591$/T) KMTA 39 0 0 0

PTA-exporting Unit Price $/T 693 719 719

PX Comsumption (567$/T) KMTA 246 197 147 117

EPC Cost MMUS$ 960 880 780 720Other Project Costs MMUS$ 160 150 120 110Project Cost MMUS$ 1,120 1,030 900 830Equity MMUS$ 170 150 130 120Loan MMUS$ 950 880 770 710

IRR %NPV at discount rate of 10.5% MMUS$ -599 -551 -462 -420Equity Payout Period year 11 11 10 10

ー

47.7%100% 80% 60%

2.7% 2.9% 3.1% 3.3%

S-36

6-3. Volume of PET to be produced

The profitability of Case 4 would be better in the case where the PET is produced at a smaller

volume.

Table S-6-6: Changing of Profitability corresponding to reducing of PET production

PET ProductionPET Production Capacity KMTA 200 160 120 100Kazakhstan (1,065$/T) KMTA 44 44 44 44Russia (1,010$/T) KMTA 82 82 76 56Eastern Europe (1,005$/T) KMTA 40 40 0 0Other Central Asian Countries (940$/T) KMTA 34 14 0 0

PET Unit Price $/T 1,009 1,024 1,030 1,034

PTA Production Capacity KMTA 362 328 293 276PTA Exporting KMTA 189 189 189 189

PX Comsumption (567$/T) KMTA 246 223 199 187

EPC Cost MMUS$ 960 860 770 720Other Project Costs MMUS$ 160 140 120 110Project Cost MMUS$ 1,120 1,000 890 830Equity MMUS$ 170 150 130 120Loan MMUS$ 950 850 760 710

IRR %NPV at discount rate of 10.5% MMUS$ -599 -507 -440 -397Equity Payout Period year 11 10 10 9

2.7% 3.2% 3.4% 4.0%

50%100% 80% 60%

6-4. Case with PET production at 100KMTA and without exporting of PTA (Case 5)

Table S-6-7 illustrates the cash flow in the case where in the Case 4 the PET would be

produced at 100 KMTA but the PTA would not be exported, which the Study name Case 5.

S-37

Table S-6-7: Preliminary Cash Flow before Tax (Case 5: PET at 100KMTA, without PTA) (MMUS$)

-4 -3 -2 -1 1 2 3 10 11-20Operation Rate 85% 95% 100% 100% 100%

Sales Revenue (A)- PTA (0KMTA x 719$/T) 0 0 0 0 0- PET (100KMTA x 1,034$/T) 88 98 103 103 103- EB (179KMTA x 893$/T) 136 152 160 160 160Sub-total (A) 224 250 263 263 263

Feed Costs- PX (59KMTA x 567$/T) -28 -31 -33 -33 -33- BZ (133KMTA x 409$/T) -46 -51 -54 -54 -54- Ethylene (68KMTA x 927$/T) -54 -60 -63 -63 -63- Acetic Acid (5KMTA x 376$/T) -2 -2 -2 -2 -2Sub-total (B) -130 -144 -152 -152 -152

Utility Costs- PTA Production (87KMTA) -5 -6 -6 -6 -6- PET Production (100KMTA) -3 -3 -3 -3 -3- EB Production (179KMTA) 1 1 1 1 1Sub-total (C) -8 -9 -9 -9 -9

Catalyst & Chemicals- PTA Production (87KMTA) -2 -2 -2 -2 -2- PET Production (100KMTA) 0 0 0 0 0- EB Production (179KMTA) -1 -1 -1 -1 -1Sub-total (D) -3 -3 -3 -3 -3

Direct Fixed Cost- Manpower (Average20,000*$/Y x 185Psns) -4 -4 -4 -4 -4- Overheads (Manpower 4MM$ x 12%) 0 0 0 0 0- Maintenance (EPC Cost 450MM$ x 2%) -9 -9 -9 -9 -9- Insurance (EPC Cost 450MM$ x 0.1%) 0 0 0 0 0Sub-total (F) -13 -13 -13 -13 -13

- Loan Repayment (440**MM$ x 10Years) -44 -44 -44 -44 0- Loan Interest (440**MM$ x 8%) -35 -32 -28 -4 0** including IDC: 50MM$

Sub-total (G) -79 -76 -72 -48 0

Project Costs (H)- Project Costs other than IDC: 470MM$ -80 -130 -130 -130(Equity: 80MM$, 15% of Project Cost: 520MM$)

Grand Total (A)～(H) -80 -130 -130 -130 -9 5 14 38 86

Note: *Operators: 1.63MMKTZ x 60% + Engineers: 2.71MMKTZ x 30% + Managers: 8.16MMKTZ x 10%

Net Present Value (before tax) (MMUS$)Discount Rates -4 -3 -2 -1 1 2 3 10 Total***

5.7% -80 -123 -116 -110 -7 4 10 19 010.5% -80 -118 -106 -96 -6 3 8 10 -185

Equity-payout-period Calculation (MMUS$)Equity to be returned: (paid out at 6th year) -20 -40 -60 -80 -80 -75 -61 paid out*** Totaling NPVs from the Project commencement to the 20th year.

Project Year

PET ProductionPET Production Capacity KMTA 100Kazakhstan (1,065$/T) KMTA 44Russia (1,010$/T) KMTA 56Eastern Europe (1,005$/T) KMTA 0Other Central Asian Countries (940$/T) KMTA 0

PET Unit Price $/T 1,034

PTA Production Capacity KMTA 87PTA Exporting KMTA 0

PX Comsumption (567$/T) KMTA 59

EPC Cost MMUS$ 450Other Project Costs MMUS$ 70Project Cost MMUS$ 520Equity MMUS$ 80Loan MMUS$ 440

IRR %NPV at discount rate of 10.5% MMUS$ -185Equity Payout Period year 6

50%

5.7%

S-38

6-5. Volume of PVC to be produced (Case 6)

The profitability of Case 3 would be better in the case where the PVC is produced at a smaller

volume.

Table S-6-8: Changing of Profitability corresponding to reducing of PVC production

PVC ProductionPVC Production Capacity KMTA 200 160 120 100Kazakhstan (1,038$/T) KMTA 52 52 52 52Russia (983$/T) KMTA 65 65 65 48Other Central Asian Countries (913$/T) KMTA 29 29 3 0Turkey (808$/T) KMTA 54 14 0 0

PVC Unit Price $/T 940 973 1,005 1,012

NaOH Exporting KMTA 125 100 75 63Kazakhstan (255$/T) KMTA 56 56 56 56Eastern Europe (317$/T) KMTA 69 44 19 7

NaOH Unit Price KMTA 289 282 271 262

EPC Cost MMUS$ 690 590 480 420Other Project Costs MMUS$ 110 100 80 60Project Cost MMUS$ 800 690 560 480Equity MMUS$ 120 100 80 70Loan MMUS$ 680 590 480 410

IRR %NPV at discount rate of 10.5% MMUS$ -590 -523 -445 -391Equity Payout Period year 12 12 12 12

50%100% 80% 60%

-0.9% -1.3% -2.0% -2.3%

S-39

Table S-6-9: Preliminary Cash Flow before Tax (Case 6: PVC at 100KMTA)

(MMUS$)

-4 -3 -2 -1 1 2 3 10 11-20Operation Rate 85% 95% 100% 100% 100%

Sales Revenue (A)- PVC (100KMTA x 1,012$/T) 86 96 101 101 101- NaOH (63KMTA x 262$/T) 14 16 17 17 17Sub-total (A) 100 112 118 118 118

Feed Costs- Ethylene (47KMTA x 927$/T) -37 -42 -44 -44 -44- Salt Rock (85KMTA x 30$/T) -3 -3 -3 -3 -3Sub-total (B) -40 -45 -47 -47 -47

Utility Costs- Production (100KMTA) -14 -16 -17 -17 -17Sub-total (C) -14 -16 -17 -17 -17

Catalyst & Chemicals- Production (100KMTA) 0 0 0 0 0Sub-total (D) 0 0 0 0 0

Direct Fixed Cost- Manpower (Average20,000*$/Y x 174Psns) -3 -3 -3 -3 -3- Overheads (Manpower 3MM$ x 12%) 0 0 0 0 0- Maintenance (EPC Cost 420MM$ x 2%) -8 -8 -8 -8 -8- Insurance (EPC Cost 420MM$ x 0.1%) 0 0 0 0 0Sub-total (E) -11 -11 -11 -11 -11

- Loan Repayment (410**MM$ x 10Years) -41 -41 -41 -41 0- Loan Interest (410**MM$ x 8%) -33 -30 -26 -3 0** including IDC: 40MM$

Sub-total (F) -74 -71 -67 -44 0

Project Costs (G)- Project Costs other than IDC: 440MM$ -50 -130 -130 -130(Equity: 70$, 15% of Project Cost: 480$)

Grand Total (A)+(B)+(C)+(D)+(E)+(F)+(G) -50 -130 -130 -130 -39 -31 -24 -1 43

Note: *Operators: 1.63MMKTZ x 60% + Engineers: 2.71MMKTZ x 30% + Managers: 8.16MMKTZ x 10%

Net Present Value (before tax)

Discount Rates -4 -3 -2 -1 1 2 3 10 Total***

-2.3% -50 -133 -136 -139 -43 -35 -28 -1 010.5% -50 -118 -106 -96 -26 -19 -13 0 -391

*** Totaling NPVs from the Project commencement to to the 20th year.

Equity-payout-period Calculation (MMUS$)

Equity to be returned: ( not paid out) -10 -30 -50 -70 -70 -70 -70 -70

Project Year

7. Financing for Petrochemical Complex (Chapter 8)

Petrochemical Complex requires to establish a special purpose company (SPC) and the

financing would be of a project finance based on the assets and the profit in the Project, in which it

is necessary to clear securities against the following risks:

(1) Risks in Pre-completion Stage to be secured with the Completion Guarantee, etc.

(2) Risks in Post-completion Stage to be secured with Operation Agreement, Long-term Supply

Contract, Long-term Off-take Agreement, etc.

(3) Foreign Currency Conversion Risk

(4) Political Risk

(5) Regulatory Risk, of a policy-change risk

S-40

8. Environmental and Social Impact (Chapter 10)

Excluding PVC production of which subsidiary raw material is harmful chlorine, the

fundamental raw materials are clean aromatics extracted from reformate and ethylene comes from

ethane in the associated gas. Accordingly, the project is environmentally mild one.

8-1. Impact on Atmospheric Environment

The Atyrau Oil Refinery has been recently promoting the introduction of advanced oil refining

processes to upgrade its oil products. The upstream CCR process of this project is included in the

series of oil product upgrading. In general, advanced oil refining process additionally produces

light hydrocarbon components consumed as fuel gas in the refinery to decrease sulfur containing

fuel oil consumption and air pollutants emission. Actually, the pattern of fuel consumption in the

Atyrau Oil Refinery, which has recently promoted advanced oil refining processes, has converted

from the fuel oil major one to the fuel gas major one. The trend of fuel gas major in fuel

consumption might make it possible to operate high efficient steam and power cogeneration

facilities utilizing gas turbine power generators and heat recovery steam generators. In other

words, the project has a possibility of air quality improvement in Atyrau territory in the future not

causes negative impact on air quality.

In the Karabatan Site, the major part of fuel is consumed for power generation to supply

enormous power to PVC production plant. In order to generate low cost power the application of

gas turbine cogeneration system might be indispensably required. As a result of natural gas

consumption in GTG cogeneration system, the impact of the project implementation on the air

quality will be minimal. Although enormous quantity of harmful chlorine is handled in PVC

production plant, the technologies for prevention of chlorine leakage from enclosure and the

process for harmlessness of chlorine has worldwide developed and utilized. With such reliable

technologies and processes, there will be scarce possibility of serious impact on environmental

issues caused by the PVC production plant.

8-2. Impact on Water Environment

The water utilized in Atyrau Oil Refinery comes from the Ural River, while it is prohibited to

discharge the industrial effluents into the Ural River or the Caspian Sea in order not to damage the

water qualities of them. The Atyrau Oil Refinery utilizes the evaporation pounds for waste water

treatment. With enormous land area and scarce rainfall in Kazakhstan, it is rather general

procedure to utilize the evaporation ponds for waste water treatment and dispose of remaining

wastes in the landfill without inhabitants. Assuming that not only the Atyrau Oil Refinery but

Karabatan Site of the project applies the same procedure of waste water disposal, the project will

not bring serious impact on the qualities of water basins.

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8-3. Industrial Wastes

The major wastes of the project might be waste catalysts and waste polymers. As for waste

catalysts, the recovery system to return them to the suppliers has worldwide firmly established, it

will not be serious issues for project owner. The polymer wastes are substantially stable not to

cause environmental damages, if left as they are. The polymer wastes are sometimes utilized as

off-specification grade or, excluding PVC which includes harmful chlorine, they are burnt in the

incinerator.

As the major raw materials of the project are clean aromatics and ethylene, which do not

contain harmful components such as heavy metals, there will be scarce possibility of serious

environmental issues.

8-4. Noise and Vibration

Because the Atyrau Oil Refinery is situated in the exclusively industrialized zone far from

residential zone, there will be scarce possibility of noise and vibration impact to the inhabitants by

the project implementation. Karabatan Site is situated in the desert area without inhabitant

approximate five (5) km far from neighboring village and there will be scarce possibility of noise

and vibration emitted by the project will not cause any environmental issues.

8-5. Landscape

The Atyrau Oil Refinery is situated in the exclusively industrialized zone not to damage the

landscape by the project implementation. The Karabatan Site is situated in the desert area with

almost no vegetation or artificial structure not to damage the landscape by the project

implementation.

8-6. Social Impact

The project sites of the project are Atyrau Oil Refinery and Karabatan newly developed

industrial zone. The former is in the existing oil refinery, while the later is in the remote desert

zone with no inhabitant. Accordingly, no migration of inhabitant is necessary for the project

implementation in both project sites and the social impact by the project implementation will be

minimal.

The logistic quantities of materials of the project will be 700 KMTA for the Atyrau Oil

Refinery and 1,200 KMTA for the Aromatic Complex in Karabatan Site. The logistic quantities of

materials will not so much change after the project realization in the Atyrau Oil Refinery. For the

Karabatan site with almost no logistic quantities of materials at present, the local traffic impact

caused by the project implementation looks as if quite serious. However, there are few inhabitants

to be affected by the increase in logistic quantities of materials and the social impact by the increase

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in traffic for the project might be minimal in the Karabatan Site.

The increase in employment by the project implementation is expected to be approximately

2,000 employees in total of the Atyrau Oil Refinery and the Karabatan Site during three (3) year

construction phase. The increase in direct employment by the Atyrau Oil Refinery and Aromatics

Complex in Karabatan during commercial operation is expected to be about 300 employees totally.

In addition to the increase of direct employment, the increase in indirect employees of residential

contractors in Atyrau Oil Refinery and Karabatan Site will be approximate 100 employees in total.

Accordingly, the positive social impact by the project implementation will by far exceed the

negative one.

9. Development of Plastic Industry in Kazakhstan (Chapter 9)

9-1.Strengthening and development of educational system to promote plastic industry in

Kazakhstan

9-1-1. Background of human resource development in plastic industry

It seems that there is no integrated manufacturing company from mold designing to the final

plastic products. Absence of plastic industry association makes it difficult to collect definite

information. As for academic institute, there are no special institutes that can teach design and

manufacture precision plastic moldings. Some engineering collage teaches CAD, however, it is

not focus on practical plastic dies making. Also, some university and polytechnic have open

college courses for workers for skill training but it is not directly connecting to plastic molding.

Moreover, vocational training for working people on metalworking and plastic molding is mostly

neglected in the country.

Human resource development is indispensable factor to promote market competitiveness of

plastic industry in Kazakhstan.

9-1-2. Target goal of human resource development in plastic industry

To promote plastic industry of Kazakhstan as an economic driving engine for next generation

9-1-3. Objective to promote human resources

(1) Human resource development is indispensable for production of precision plastic parts and

components

(2) Industrial promotion can first be discussed with nurturing human resources

(3) Qualified human resource could be a creditable drive force in any industry.

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(4) Vocational training, skill improvement for workers, training of qualified technicians and

engineer has not been tackled in the country.

9-1-4. Approaches

(1) Promote products which require only a simple technology to compensate import substitution

and to boost competitiveness within central Asian market

(2) Promote public purchasing in order to nurture domestic production

(3) Enumerate domestic products for import substitution and give special preference to help

them to invest in a high-tech machines

(4) Develop plastic specialized industrial park with common service facility for joint

development, public research institute for technology assistance and for public/private joint

activity

(5) Combine human resource development project and plastic industry promotion project as one

project to enjoy synergetic effects

(6) Discuss precision plastic manufacturing, following the low skill products manufacturing and

training.

9-1-5. Outline of the human resource program

As explained in the above section, human resource development program is better to be

tackled in other project simultaneously because it is targeting to boost national economy at final.

Here, we will introduce only an outline of the human resource development program by

summarizing mile stone subjects.

(1) Associate relating companies and organizations

(2) Develop resource network

(3) Make training of instructors

(4) Strengthen training facility and equipment to execute improvement of training program

9-2. Establishment of plastic industry association

9-2-1. Objective of the recommendation

Association, generally, deal with increasing profit of the industry. However, there is no

association representing plastic industry in Kazakhstan.

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9-2-2. Approach to establish industrial association

Most of business entities do not aware of the importance and capability of association. This

is the main reason why association activities in Kazakhstan do not active. In addition to self effort

by private entities, governmental support is also significant to establish the association.

(1) Top priority activity to establish the association:

- Irradiate private firms about the profit to associate

(2) Support from the government

- Cooperative Law for industrial sector

- Law for commerce and industry cooperative

- Law for credit cooperative

9-2-3. Activities of Japan Plastics Industry Federation (JPIF)

The following activities of JPIF would provide the Project with useful information:

(1) Activities for the plastics industry such as assistance in taxation, making of measures for

SMEs and against recessions, etc.

(2) Activities on industrial statistics to grasp the trend of the industry

(3) Activities for the society in view of conserving of the environment and securing of the safety

(4) Activities related to safety of plastics in electronic materials

(5) Public relations to deepen the understanding on plastics by the society

(6) Activities related to codes and standards

(7) International activities such as dispatching overseas of the survey team

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