Supply Сhain

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.

In 2022, KPO awarded contracts and contract amendments to 388 contractors and suppliers, nearly 84 % of which were local entities.

In 2022, KPO signed approximately 270 contracts and contract amendments for delivery of goods worth over US$ 0.3 bln and more than 500 contracts and contract amendments for services worth over US$ 0.8 bln.

KPO is committed to conducting its business ethically and in compliance with the established Code of Conduct policy, all applicable laws and regulations.

These fundamental principles are incorporated in and are evaluated at every stage of the contract and procurement process until the closure of the contract

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.

KPO contract standard terms and conditions include number of provisions which cover Ethics and Business Practices, anti-corruption and conflict of interest. Also new provisions for industrial relations between KPO and Contractors was implemented in 2022 to strengthen social responsibilities of contractors in terms of taking care of their personnel and insurance of stable social environment within its dedicated staff. Read more in this Report in “Industrial relations”.

KPO standard terms and conditions of contracts are updated on a regular basis to reflect the latest RoQ legislation and KPO requirements. Thus, in 2022 KPO implemented updates in Schedule D – “Contract HSE Requirements” related the new requirements of RoQ Environmental Code. Read more in this Report in “Environmental suppliers’ assessment”. KPO performs its 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.

In accordance with the latest Tender Procedure and as a part of digitalization project KPO aims to enhance electronic document exchange and processing including tender submissions and evaluation. 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.

KPO has faced with complexity of logistics issue and associated risks in terms of time and costs. This risk caused by geopolitical situation is beyond of KPO control, however, KPO is doing its best to apply possible measures and alternative solutions to ensure uninterrupted supply of goods and materials.

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 https://www.kpo.kz/en/suppliers/contract-plan.

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 Qazaqstan 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.