The activities of KTG and its subsidiaries and affiliates are subject to production and non-production risks. KTG is aware of the importance of risk management as one of the key components of the corporate governance system aimed at the timely identification, assessment and adoption of risk mitigation measures that may affect the achievement of the Group’s strategic and operational goals, as well as the value and reputation of the Group.

The purpose of KTG risk management is to ensure reasonable confidence in the strategic and operational sustainability of business.


The risk management program of KazTransGas JSC Company Group in 2018

As a part of the implementation of a vertical risk management process conducted by KazMunayGas NC JSC, risks identification, assessment and monitoring of KTG Company Group is carried out in the Automated Risk Management System ( (hereinafter - ARMS).

During the period from February 1 to March 30, 2018, risk coordinators and risk managers of KTG and its subsidiaries were trained in basic requirements and work in ARMS; within May 17 – 18, 2018, risk managers and risk coordinators from jointly controlled organizations of KTG were trained in basic requirements and work in ARMS.

In KTG and its subsidiaries and affiliates, the structural unit and/or responsible person for risk management is subordinate to the First Head of the Company.

In the period from August 2 to October 1, 2018, interviews with key employees of all structural units of KTG and its subsidiaries and affiliates on risk management were conducted:

1) risks that may affect the goals achievement of KTG Company Group were identified;

2) the potential extent of damage in case of risk realization is determined.

The key risks of KTG and its subsidiaries and affiliates with the most significant impact on the Company's operations are below.

In KTG, 65 inherent risks have been identified, risk codes have been assigned in accordance with the Unified Risk Classifier of KTG and its subsidiaries and affiliates, risk owners have been identified and action plans have been developed to minimize risks.

For the KTG Company Group, 21 key risks were identified and displayed on the KTG Key Risk Map.

The default risk in terms of gas supply under the gas purchase and sale contract (export)

The risk is occurred due to several factors:

1. The increase in consumption in the domestic market;

2. Refusal to accept gas from the buyer;

3. Default by the supplier.

Legislative changes in business requirements.

The following factors affect the realization of this risk:

Restrictions in the implementation of KTGO business (production and commercial) activities. Transfer of more than 50% participation interest in a business to an outside organization. Lack of interholding cooperation. Uncertainties associated with dependence on a key partner - transition to market relations with the KTG Company Group and Samruk-Kazyna SWF JSC (Fund), participation in tenders for rental services of vehicles and special equipment conducted by KTG Company Group and the Fund on a common basis. Increased competition within the framework of the Fund Holding when participating in tenders of the Group and the Fund - the presence of large service motor transport companies of the Fund.

Uncertainties associated with dependence on a key partner (Gazprom PJSC)

The following factors affect the realization of this risk:

Refusal of Gazprom PJSC to purchase Central Asian gas. Reduction of gas export deliveries of Gazprom PJSC to Europe, including to Ukraine. The economic situation in Russia, the decline in domestic gas consumption in Russia. Non-fulfillment of contractual obligations by Gazprom PJSC or gas suppliers. Availability of the resource base of gas supplying countries to fulfill contractual obligations. The state of the global economy. Climatic conditions. Political and economic situation in gas supplying/consuming countries. The policy of Gazprom PJSC with gas consumers. Negative position of Gazprom PJSC regarding issues of increasing gas transit rates. Increased Russian gas production.

Tenge fluctuations against the US dollar

There is a possibility of currency losses associated with changes in the US dollar relative to the Tenge, interest rates, the state of the current trade balance, inflation rate, economic and political conditions.

Risk of non-return on investment of KazTransGaz Bishkek LLC

This risk is due to the unstable political situation in the Kyrgyz Republic (KazTransGaz Bishkek LLC).

The short supply of imported gas within the framework of exchange operations in the South of the Republic of Kazakhstan (gas shortage during the AWP)

The occurrence of risk is due to default by the supplier.

In order to systematize and unify risk management and internal control systems, KTG has developed a register of KTG risks, and key risks are applied to the Risk Map:


Improving KazTransGas JSC risk culture

  1. The work of the Risk Committee has been strengthened; all significant events that may adversely affect the achievement of the goals of KTG and its subsidiaries and affiliates are collectively reviewed at meetings of the Risk Committees of KTG and the subsidiaries and affiliates.
  2. The work on arranging insurance protection of risks of KTG Company Group. Risk insurance training was organizaed.
  3. The event “Implementation of a vertical risk management process” included in KPI of the Managing Director for Gas Transportation and Storage of KazMunayGas NC JSC was implemented by 100%.
  4. A package of reports on financial risks has been formed - quarterly monitoring is conducted on:
  •  compliance with country risk limits;
  •  limits on obligations to counterparty banks;
  •  currency risks;
  •  interest breaks by currency.