OREANDA-NEWS. On January 15, 2007 Fitch Ratings has affirmed National Company KazMunaiGaz's (NC KMG) Long-term foreign and local currency Issuer Default ratings (IDR) at 'BBB' and Short-term foreign currency IDR at 'F3'. The Outlooks for the Long-term foreign and local currency IDRs are Negative, reported the Official website http://en.government.kz.

The affirmation follows yesterday's announcement that the company plans to increase its stake in the Kashagan oilfield to 16,81% from 8,33%, equalising its participation with that of the international members of the consortium of which NC KMG is part.

Much of the government's interest in increasing NC KMG's participation in the Kashagan field, which is operated primarily by international oil companies, can be explained by the importance of the field for oil output growth in Kazakhstan.

Fitch notes that the oil and gas industry is crucial to the country's economy, contributing 16% of its GDP. Furthermore, the current oil price environment is favourable, underpinning the economics of investments in the Kashagan field.

Fitch believes that this transaction will have a limited impact on NC KMG's financial profile as it is expected to be funded by cash flows from the Kashagan field. NC KMG had an ample cash position of USD5.2bn at the end of 9M07 and modest net leverage of 0,5x at FYE06. However, Fitch will monitor the execution of this deal as well as the potential for higher investments by NC KMG in the Kashagan field following its increased role in the project.

Kashagan is the fifth-largest oilfield in the world with reserves of about 7 billion-9 billion barrels of oil equivalent. It is managed by a consortium of Eni Spa ('AA-' (AA minus)/Stable), ExxonMobil Corporation ('AAA'/Stable), Royal Dutch Shell plc ('AA+'/Stable), Total SA ('AA'/Positive), ConocoPhillips ('A'/Stable), Inpex and NC KMG. In addition to NC KMG's stake increase, the consortium agreed to pay about USD2,95bn-5,4bn, depending on the oil price, to Kazakhstan ('BBB'/Negative) for project delays and cost overruns.

NC KMG is a national oil and gas holding company in Kazakhstan. It is a wholly state-owned enterprise with operations in upstream oil and gas exploration and production, oil refining and oil and gas transportation and distribution.