Supply chain
Development of the Karachaganak Field implies for Qazaqstan more than just generating income and taxes from oil and gas production. This is also an establishment of long-term and strong partnerships, which may impact and promote economic development.
Working with local suppliers and contractors constitutes an essential part of the economic development of the region and Qazaqstan as a whole.
KPO is committed to conducting its business ethically and in compliance with the established Code of Conduct policy, all applicable laws and regulations. Therefore, KPO enters into contractual relationships with suppliers and contractors, who maintain high standards and demonstrate commitment to personal and process safety when providing services to the Company, as well as maintaining the set standards of ethics, compliance and sustainable development. These fundamental principles are incorporated in and are evaluated at every stage of the contract and procurement process until the closure of the contract.
In 2021, KPO awarded contracts and contract amendments to some 500 contractors and suppliers, nearly 80 % of which were local entities.
In 2021, KPO signed approximately 600 contracts and contract amendments for delivery of goods worth approximately US$ 0.3 bln and approximately 800 contracts and contract amendments for services worth approximately US$ 1.4 bln.
Why is it important to us?
KPO procurement process is challenged with economic risks, such as limited market competition, inflation and exchange rate fluctuation. In order to maximize mitigation of these risks, KPO aims to develop technical specifications and tender requirements in a transparent and objective way to ensure market competition, application of various compensation mechanisms covering potential economic fluctuations in contract terms and conditions, and other measures described further
Graph 25. KPO contractors and suppliers, 2018 – 2021
Graph 26. Value of contracts and contract amendments (mln US$), 2018–2021
We perform our contracts and procurement activities in compliance with the legislation and the Karachaganak Joint Operating Committee’s Tender Procedures, which regulate procurement of goods, works and services for the Karachaganak Project.
The latest Tender Procedures provide for enhanced electronic documents exchange and processing including tender receipt and evaluation, which in turn addressed the COVID-19 limitations. The Tender Procedures also focuses on the development of local content including goods manufacturing in the Republic of Qazaqstan by means of early tenders, trial orders, contracts in exchange of investments, conditional bid reduction, and Qazaq-only tenders.
To help local potential contractors and suppliers better compete and to minimize disqualification risks for such companies, KPO has been focusing on structured pre-tender engagement sessions. In these sessions, clear explanations of KPO tender requirements are provided to the bidders, as well as lessons learned.
KPO is an active participant in the events conducted by Atameken, KazService and other oil-and-gas organisations or associations. Using multiple opportunities, KPO actively presents its requirements to the local market participants and encourages their development and growth including cooperation with internationally recognised and experienced suppliers of goods, works and services.
Delivering Local Content targets is an important commitment of KPO to the Republic of Qazaqstan and is well recognized by KPO.
As a transparent operator, KPO annually publishes its procurement plans on its website at www.kpo.kz.
Potential suppliers interested in participating in KPO tenders are encouraged to register and keep their “vendor’s profile” up-to-date in KPO Vendor database (please see details at www.kpo.kz) or directly in Kazakhstan Unified Vendor ALASH Database. It is very important for potential contractors and suppliers to provide accurate and relevant information on their competencies and experience to be considered by KPO in its sourcing strategies.
In 2021, KPO created a page https://cp.kpo.kz/ on its website where companies can raise a question, which will be directed to the responsible KPO department. There is also a tab with answers on “Frequently Asked Questions” available on this page.