Summary of project implementation aligned with strategic priorities

Investment projects are implemented to advance progress towards KMG’s strategic goals, i.e. to achieve reserves growth, increase oil and condensate production, grow gas exports to China, and supply the domestic market with oil products and sales gas.

KMG is committed to smart and efficient capital allocation with a focus on priority projects aligned with our strategic goals and targets for cash flows, debt reduction, and higher returns on equity to drive shareholder value growth.

Transition to investment and project portfolio management

Aimed at effectively achieving strategic goals under KMG’s Development strategy the Company started a transition to portfolio-based investment management in 2019. One tool of the portfolio-based investment management is project ranking, prioritizing highly efficient strategically important projects.

Prioritized portfolio of projects based on their ratings enables effective allocation of the Company’s set limited financial resources, leading to increased competition for investments in the business segments.

In 2019, the Company also launched an initiative to introduce a project management system. The system aims to improve the quality of planning and implementation of investment projects by applying the best practices of project management from the world’s oil & gas companies.

In 2020, it is planned to introduce a unified project management standard for the Company, conduct full-scale training for participants of project management and launch an information system to control and monitor projects.

In general, the objectives of the reorganization of the investment process in 2019 and for the future are aimed at improving existing processes to increase the maturity of the Company in terms of investment management and project management.