ECONOMIC IMPACT

Business principle: Communities	We aim to be good neighbours by continuously improving the ways in which we contribute directly or indirectly to the general wellbeing of the communities within which we work. We build productive, collaborative and trusting relationships with government, our shareholders, our business partners, the local communities where we work and with each other.
Business principle: Economic	We seek to compete fairly and ethically within the framework of applicable competition laws.

Supply chain

Development of the Karachaganak Field implies for Kazakhstan more than just generating income and taxes from oil and gas production. This is also an establishment of long-term and strong partnerships, which is supposed to positively impact and promote economic development in the region.

Working with local suppliers and contractors constitutes an essential part of the economic development of the region and Kazakhstan as a whole.

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

In 2023, KPO awarded contracts and contract amendments to 355 contractors and suppliers, nearly 89 % of which were local entities.

KPO INSISTS ON CONTRACTUAL RELATIONSHIPS WITH SUPPLIERS AND CONTRACTORS, WHO MAINTAIN HIGH STANDARDS AND DEMONSTRATE COMMITMENT TO PERSONAL AND PROCESS SAFETY WHEN PROVIDING SERVICES OR GOODS, AS WELL AS MAINTAINING THE SET STANDARDS OF ETHICS, COMPLIANCE AND SUSTAINABLE DEVELOPMENT.

In 2023, KPO signed 172 contracts and contract amendments for delivery of goods worth about US$ 0.2 bln (0.17) and 503 contracts and contract amendments for services worth over US$ 0.8 bln.

KPO insists on contractual relationships with suppliers and contractors, who maintain high standards and demonstrate commitment to personal and process safety when providing services or goods, 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.

KPO standard contract terms and conditions include number of provisions, which cover Ethics and Business Practices, anti-corruption and conflict of interest. Since 2022, the provisions for industrial relations between KPO and Contractors are in force in order to strengthen social responsibility of contractors and to ensure stable social environment within their own staff. Please read more in this Report in “Industrial relations”.

KPO regularly update its standard terms and conditions of contracts to reflect the latest RoK legislation and KPO requirements.

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.

Digital tools are widely applied in contractual activities. In accordance with the latest Tender Procedure since 2020 KPO has been accepting electronic documents in processing tender submissions which extensively accelerate bid processes. The Tender Procedures focus on the development of local content including goods manufacturing in the Republic of Kazakhstan by means of early tenders, trial orders, contracts in exchange of investments, conditional bid reduction, and Kazakh-only tenders.

At the end of 2023 KPO successfully awarded the contract for provision of e-procurement system, implementation support, run and maintain services. This will allow KPO to digitalize procurement process and increase its efficiency. The launch of the new system is planned by the end of 2024.

Communication with potential suppliers

KPO uses multiple opportunities to engage with potential suppliers and contractors and presents its requirements to the local market participants

To help local potential contractors and suppliers better compete and to minimize disqualification risks for such companies, KPO conducts structured pre-tender engagement sessions. In these sessions, clear explanations of KPO tender requirements are provided to the bidders, as well as lessons learned.

Development of local producers including cooperation with internationally recognised and experienced suppliers of goods, works and services are also encouraged.

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.

KPO provides opportunities to companies to ask questions on the page https://cp.kpo.kz/ on its website. The questions are directed to the responsible KPO department. There is also a tab with answers on “Frequently Asked Questions” available on this page.

KPO is actively engaged in the events conducted by Atameken, KazService and other oil-and-gas organisations or associations. Delivering Local Content targets is a key commitment of KPO to the Republic of Kazakhstan and is well recognized by KPO.