Strategy development

INTRODUCTION

“National Maritime Shipping Company “Kazmortransflot” Joint Stock Company (further referred to as Kazmortransflot / KMTF) was established by the regulation of the Government of the Republic of Kazakhstan dated December 4, 1998 No 1239. At the moment of Kazmortransflot establishment its sole shareholder was the Ministry of Transport and Communications of the Republic of Kazakhstan (further referred to as MTC RoK. By the decision of the Government of the Republic of Kazakhstan (Regulation of the Government of the Republic of Kazakhstan – RGRK dated May 2, 2001 No 1051) 50% of KMTF shares were transferred to the National Company “Transport of Oil and Gas” (since February 20, 2002 – JSC NC “KazMunayGas”). The other 50% block of shares of Kazmortransflot which had been in charge of MTC RoK was transferred to JSC “Holding “Samruk” according to the regulation of the Government of the Republic of Kazakhstan dated October 24, 2006 No 1020. By the Regulation of the Government of the Republic of Kazakhstan dated June 22, 2009 No 961 the 50% block of shares of Kazmortransflot which had been in charge of JSC “National Welfare Fund “Samruk-Kazyna” was transferred to JSC NC “KazMunayGas” (further referred to as KazMunayGas / KMG). Thus the latter became the Sole Shareholder of the Company.

MISSION:
Establishment and development of the national trading navy ensuring safe, environmentally sound and cost-effective naval transportation in the Caspian and othet open seas.

VISION:
Kazmortransflot is a highly efficient, competetive, integrated shipping company meeting the highest international standards of safety of navigation.
AMBITIONS OF KAZMORTRANSFLOT:
— by 2020, to provide at least 2/3 of the volume of transportation of oil and 1/2 of volumes of dry cargoes transportation from the ports of Kazakhstan with own fleet
— To tend to maintain EBITDA margin at the rate no lower than 33 per cent, ROACE at 12 per cent.
— To tend to transparency of activity and financial stability in order to attract investors.

Favorable factors for the further development of Kazmortransflot on the Caspian Sea and the open seas are:
— Kazakhstan as represented by the port of Aktau is a component of the transport corridors TRACECA and North-South, project INOGATE, allowing for access to the ports of the Caspian, Black and Mediterranean and, Baltic basins, the Gulf countries and Southeast Asia;
— In connection with the development of the Kashagan and the Tengiz oilfields, substantial growth in oil transportation through the Caspian Sea and the Black Sea to international markets through the Caspian Pipeline Consortium, the Baku-Tbilisi-Ceyhan oil pipeline and establishment of the Kazakhstan Caspian Transportation System are expected;
— The Government of Kazakhstan pays great attention to Kazakhstan content; it opens up new opportunities for KMTF to be attracted to provide services of naval transport within the major oil and gas projects in the Republic of Kazakhstan.

Kazmortransflot intends to obtain a status of a national maritime carrier, and then provide competitive services of passenger traffic, mail and cargoes transportation, including humanitarian aid, special cargoes, participate in the formation of a unified state policy in the field of merchant navigation, and ensure the implementation of its main directions, achieve international cooperation in the field of merchant navigation, participate in the formation of legislative base of merchant navigation in the Republic of Kazakhstan.
Guided by the Strategic Development Plan of the Republic of Kazakhstan till 2020, the Long-term strategy of the Sole Shareholder of Kazmortransflot, the State program for accelerated industrial and innovative development of the Republic of Kazakhstan for 2010-2014, as well as the Program of maritime transport development for 2006-2012, in order to realize its Mission and achieve the Vision, Kazmortransflot will evolve as an integrated shipping company that provides services for transportation of oil, dry cargoes, services of the marine for support of naval operations, services for offshore oil fields, actively supporting the development of shipbuilding and ship-repair infrastructure in Kazakhstan.

STRATAGY IN
TRANSPORTATION OF OIL IN THE CASPIAN SEA
OBJECTIVE: increasing of the level of energy safety of the Republic of Kazakhstan by maintaining competition of the national carrier in the market of tanker transportation and providing of safe and reliable, and economically effective services in oil transportation in the Caspian Sea, extension of the share of the market and increase of income from services of oil transportation.
TASKS:
— Increase of volumes of the Trans-Caspian oil transportation to 7,200 thousand tons, including by strengthening of competitive advantages;
— Participation of KMTF in projects of oil transportation across the Caspian Sea;
— Costs management.

STRATAGY IN
TRANSPORTATION OF OIL IN THE OPEAN SEAS
OBJECTIVE: ensuring of technologically independent and efficient transportation passage for Kazakhstan by safe and reliable operation of the transportation and logistic system of the Kazakhstan oil transportation into the world market, and acquisition of additional income.
TASKS:
— Increase of volumes of oil transportation in the open seas to 6,700 thousand tons, including by strengthening of competitive advantages;
— Establishment and expansion of own fleet for transportation of oil in the open seas;
— Establishment of strategic partnerships ensuring participation of KMTF in the projects of transportation of oil in the open seas;
— Costs management.

STRATAGY IN
TRANSPORTATION OF DRY CARGOES
OBJECTIVE: diversification of activities of Kazmortransflot, providing stability of Kazmortransflot in case of changes in the oil market, and creating of a new profit center.
TASKS:
— Monitor Sanction situation as well as the development of alternative transportation routes to main markets;
— Costs management.

STRATAGY IN
SERVICES OF MARINE FOR SUPPORT OF NAVAL OPERATINS
OBJECTIVE: expansion of the market share by increasing own fleet of the marine for support of naval operations (hereinafter – MSNO) under the State Program of development of deposits of KSCS; expansion of the range of services, and acquisition of additional income.
TASKS:
— Expansion of own marine for support of naval operations;
— Increase of volume of rock transportation for oil and gas projects to 2,300 thousand tons;
— Establishment and development of own service fleet;
— Establishment of strategic partnership with a large international company;
— Costs management.

STRATAGY IN SERVICES
OBJECTIVE: assistance in development of service infrastructure by rendering of quality, competitive services in the following areas:
— services on land transport and transshipment of rock, as well as services of berth in the Tupkaragan Gulf;
— all types of ship repair services through a joint venture on repair of small vessels in Bautino;
— diving services for marine vessels, coastal and offshore structures;
— services of base of fleet in the Kuryk settlement.

TASKS:
— Establishment and development of service infrastructure in the Caspian Sea;
— Expansion of volumes of services on rock transshipment to 2,300.0 thousand tons by 2020 for oil and gas projects in KSCS;
— Development of diving services.

STRATEGY IN PROTECTION OF HEALTH, LABOR AND ENVIRONMENT AND NAVIGATION SAFETY
OBJECTIVE: Carrying out own productive activities in full compliance with the strictest requirements of current legislation, international conventions ratified by the Republic of Kazakhstan and the international standards as for quality, environmental protection, occupational safety, protection of health, and safety of navigation.
TASKS:
— Compliance of the activity of KMTF with the international standards and international conventions, ratified by the RK;
— Wrecks prevention.

STRATEGY IN DEVELOPMENT OF LABOR RESOURCES
OBJECTIVE: ensure a systematic and purposeful work on development of skills and competencies of staff of Kazmortransflot, creation and further development of the educational system for training of national maritime personnel.
TASKS:
— Planning and managing human resources.
— Staff turnover – within the range of 14%.
— Improvement of the professional level of employees of KMTF.
— Creation of an educational system for training national navigation staff.
— Implementation of the Program of development of the Kazakhstan personnel for the tanker fleet and marine of support of naval oil operations for 2007-2011.

STRATEGY IN DEVELOPMENT AND IMPROVEMENT OF REGULATORY BASE
OBJECTIVE: improvement of the current regulatory base in accordance with the international conventions and standards, ensuring favorable conditions for development of the national merchant fleet.
TASKS:
— Participation of KMTF in the process of improvement of regulatory base in the sphere of maritime transport.

STRATEGY IN IMPROVING EFFICIENCY OF MANAGEMENT
OBJECTIVE: Increase of profitability of activity and investment attractiveness of KMTF and its affiliates, achievement of financial stability and independency by attraction of financial resources.
TASKS:
­— Formation of the system of results management.
— Rating of corporate governance GAMMA: by 2015 – 6; by 2020 – 7.5.
­— Ensuring of profitable and expedient vessels operation.

STRATEGY IN SAFEGUARDING
OBJECTIVE: identification and prevention of internal and external threats that could hinder the achievement of strategic goals of development and result in impairment of the company.
TASKS:
— Development of a complex system of safety management.
­— Ensuring of economic and staff safety of the company.
­— Ensuring of safety of information resources.