Local Content development / GRI 203-2, SDG 8.1, 8.3, 9.2, 9.3, 17.7, 17.17 /

Since the beginning of the Karachaganak field development, KPO has been actively increasing the local content (LC) share in Karachaganak Project by engaging the Kazakhstani goods producers and service providers. This implies the reduction in import and increase the share of goods, services and works (GWS) of local nature in the total volume of goods, works and services procured for the Karachaganak Project.

2024–2029 KPO LC Development Programme in GWS at the Karachaganak Project has been developed and approved by the JOC resolution 14/2024 on December 2024. The objectives of the Programme is in line with both state initiatives for the RoK machine building, industrialization and digitization development and KPO LC corporate policy. This Program defines the LC development objectives and tasks, as well as the key performance assessment and monitoring indicators. / GRI 2-29, 3-3 /

In 2024, KPO LC development initiatives have led to the following results: / GRI 204-1 /

• The Local Content share in procurement of Goods, Works and Services in the Karachaganak Project for 2024 was 65.00 % (equivalent to US$ 679.7 mln) which is higher by 2 % vs. planned 62 %.
• Goods locally made in Kazakhstan were purchased in amount of US$ 88.3 mln, which constitutes 42.3 % of total scope of goods procured by KPO (of which 18.2 % is the Local Content share as specified in the CT-KZ Certificate¹³).

Since the execution of FPSA in 1997, as at the end of 2024 the cumulative share of Local Content in Goods, Works and Services in Karachaganak Project had exceeded US$ 10.80 bln. / GRI 204-1 /

KPO is placing major emphasis on increasing LC share in procurement of goods produced in Kazakhstan.

In 2024, 9 contracts with a total value of over US$ 33 mln were signed for the needs of the Karachaganak Project for production of the following types of goods in Kazakhstan: electrical equipment (distribution board), valves, containers, heat exchangers, bulk materials, mechanical seals (spare parts), measurement instruments, personal protective instruments, concrete slabs, etc.

KPO is placing major emphasis on increasing LC share in procurement of goods produced in Kazakhstan.

Holding of “Kazakhstani tenders” contribute to the growth of competitiveness of local producers and suppliers. In 2024, KPO initiated 10 “Kazakhstani tenders” exclusively among local companies for the total amount of US$ 36.9 mln. As a result, KPO awarded 1 contract to the total amount of US$ 340 thousands. Other “Kazakhstani tenders” are in progress.

As part of the efforts to enhance the sustainable development of local suppliers in the region where it operates, West Kazakhstan Oblast (WKO), as of 2024 KPO paid US$539.84 mln to enterprises in WKO for delivery of Goods, Works and Services, the share of local content in which reached US$377.26 mln or 69.88 %.

In addition, the Company regularly invites the WKO enterprises, including enterprises from machine building sector, to take part in market research and in tenders for delivery of Goods, Works and Services as well as to various activities organised by the Company to develop and improve the local businesses competitiveness. The results for 2024 are as follows:

Long-term initiatives / GRI 2-28 /

KPO actively cooperates with “International Oil & Gas Machine Building Centre” (IMBC), which was established to support development of oil and gas goods production in Kazakhstan. In this respect, IMBC acts as a connecting bridge between the largest oil and gas Operators and machine-building enterprises of the RoK.

The primary objective of the IMBC is to promote sustainable development of oil and gas goods production in Kazakhstan and to increase local content in Operators’ procurement.

The main activity of the IMBC is to analyse, forecast, propose solutions and provide technical support to the producers. Taking this into account, the capability development plans are designed by IMBC to increase capacity of domestic companies. Also, IMBC serves as a bridge between Operators and investors who express interest in localization of oil and gas equipment production in the RoK, as well as with various financial institutions and state bodies to support such investment projects. IMB Centre, together with investors develop localization plans, which are submitted to the Operators for their consideration, thus the Centre contributes to technology transfer, including that of the world’s leading manufacturers of oil and gas equipment.

During the 3-year period from 2021, the IMBC continued its co-operation with local manufacturers of Goods of Commodity Groups A, B, C on development of their potential, specifically with manufacturers of valves, electrical devices and instrumentation, piping, pumps and seals, air conditioning systems and process filters, insulation materials, chemicals, HVAC equipment, PPE etc. Thus, the IMBC is currently maintaining capacity development plans (CDP) with 14 local manufacturers. Implemented CDP are considered by KPO during the vendors pre-qualification process and tenders. Also, IMBC negotiates with companies wishing to localize their activities (investment cases) in the territory of the RoK and provided KPO with 23 investment cases for analysis of demands and further consideration in its operation activities.

In 2024, the Operators agreed Commodity group D was agreed on June 2024 (Compressors; Actuators; Steel and metal materials; Workshop equipment and handtools).

KPO involves companies to participate in the ongoing tenders. As per the cooperation with IMBC, 5 contracts were awarded in 2024, such as Trial order for the provision of junction and change boxes, provision of valves, measurement instruments, electrical materials and spare parts for existing equipment including the explosion protection (ex) materials etc.

In 2024 Operators agreed to expand mandate of IMBC. The new mandate provides for the admission of new members, which will have a generally positive impact on IMBC’s activities.

KPO actively participates and takes a key role in jointly conducted events, such as:

• IMBC Forum on 10-Jul’24, Atyrau;
• Open Doors’ Day on 10-12 Jul’24, Atyrau (23MoU signed);
• IMBC seminar on the goods at Tengiz, Kashagan and Karachaganak on Group A, 02-Oct’24, Atyrau;
• Seminar on IMBC of commodity of category B – attended by KPO on 12^th December in Atyrau.

In the frame of OEM localization activities, since the introduction of the original equipment production localization initiative in 2019, KPO has signed 16 Road Maps for localization of goods and concluded 68 contracts with Original Equipment Manufacturers for the amount of over US$ 4,821.6 mln. As a result, in 2024 supply of high-tech OEM goods, manufactured in RoK, was performed exceeding the actual LC percent of contractual commitments:

• Personal Gas Detectors of Honeywell. Localization: 56.6 % (vs. commitment 15 %);
• Remote Telemetry Unit. Localization: 51.8 % (vs. commitment 15 %);
• Well Head Control Panel. Localization: 30.9 % (vs. commitment 14 %).

KPO will continue implementation of the Road Maps, which includes the attraction of additional investments.

Engagement on Local Content / SDG 17.16, 17.17 /

Recognizing the crucial role of local businesses for KPO operations, the LCD team initiated eight series of online technical awareness webinars. KPO technical experts aimed these collaborative efforts, conducted in conjunction with Contracting & Procurement and HSE departments, to bridge the gap between the company and the local supplier community.

The webinars served as a vital platform for knowledge dissemination, focusing on key aspects of the company’s Local Content development strategy, procurement processes and familiarizing with technical requirements for the following type of goods such as chemicals, valves, handling and firefighting equipment, HVAC, oil filters, isolation materials, piping products and electrical equipment.

Through interactive presentations and engaging Q&A sessions, the webinars empowered local suppliers with the knowledge and tools necessary to successfully participate in company tenders and contribute effectively to LC development initiatives.

These online events, conducted throughout the year, fostered a collaborative environment, strengthened relationships between the company and local businesses, and ultimately contributed to the achievement of the company’s ambitious LC goals. Representatives of more than 150 local manufacturers and foreign companies, who are interested in or have plans for localization, took part in the webinars.