BMB Munai Secures Export Tax Exemption

BMB Munai, an independent operating in Western Kazakhstan, has received written confirmation from the Kazakh Ministry of Finance that its subsidiary, Emir Oil, will not be subject to payment of Export Rent Tax on exported oil sales during the exploration stage of its subsoil users license agreement. The exploration stage under the current agreement will continue through July 2007, unless extended for an additional period of two years.

BMB Munai received its initial authorization to begin monthly export quotas in January 2006. The authorized quantity of the export quota is renegotiated monthly with Kazakhstan's Ministry of Energy and Mineral Resources. It is expected to increase as the company's oil production grows.

"The Export Rent Tax is scaled on the basis of the Brent oil price," said Askar Tashtitov, BMB Munai analyst. "At present the tax rate for non-exempt export sales is equal to 33 percent of revenue net of transportation expenses. Export Rent Tax is scaled against the Brent oil price and is set at the maximum level of 33 percent when Brent oil prices exceed US$40 per barrel. Authorization to make export sales coupled with the exemption from Export Rent Tax will allow BMB Munai to increase its profitability and take maximum advantage of prevailing international price of oil during the remainder of the exploration stage."