AKTAU, Mangystau oblast, June 18, 2002 -- The Karachaganak Integrated Organisation (KIO) announced at the national import substitution conference being held in Aktau on June 17- 19 that by the end of the development phase of the Karachaganak project the total value of contracts that will have been placed with Kazakhstan companies is estimated at US$1.3 billion.

KIO has made a major effort to meet the requirements of the national Import Substitution Programme introduced by the Government of the Republic of Kazakhstan with the aim to support Kazakhstan industry development. In February 2002, KIO's import substitution and Kazakh content programme received Government approval.

As KIO Import Substitution and Vendor Classification Manager Howard Burrows said, "over 400 Kazakh companies have already been awarded contracts to provide goods and services to the Karachaganak project. During 2001, almost two-thirds of contracts for new works were placed with Kazakh companies - and this business was worth close to $150 million".

Also, KIO will chair the recently established Import Substitution Committee of the Kazakh Petroleum Association that aims at providing a greater co-ordination between Kazakhstani national petroleum industry towards national industrial production use.

In another import substitution initiative, KIO is implementing a co-operation agreement programme that is placing Kazakh companies with some of its international suppliers. To date, nine joint cooperation agreements have been signed between international suppliers and Kazakh vendors, and a further five are in the course of preparation.

The agreements make possible the transfer of skills, expertise and technology which allow the companies involved to bid for contracts with KIO and, in the future, for other projects within Kazakhstan and in the international markets.

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The co-operation agreements signed in 2001 are already seeing programmes set up for the training of Kazakh personnel and the transfer of technologies.

The initiatives that have already been implemented include:

ZIKSTO / Tecnoforge: personnel of national company ZIKSTO successfully completed a two- week training programme in March this year at theTecnoforge facilities in Italy. The training program covered all aspects of the manufacturing process for carbon steel fitting, from forging and heat treatment through to painting, non-destructive testing and the packing of fittings with up to 30mm wall thickness.

ZIKSTO / Galperti: ZIKSTO staff attended a seven-day training course in March this year at Galperti’s facilities in Italy that covered all aspects of the manufacture of carbon steel flanges, including the inspection of materials, materials receipt, forging, machining, inspection painting and packing.

ANM / Steadfast: Steadfast has arranged to carry out a training in Atyrau for ANM personnel to cover all aspects of the manufacture of studbolts, including quality assurance and health, safety and environment issues.

Areal Omega / Skema: Under the agreement Skema will provide Uralsk-based alliance Areal / Omega with engineering expertise and modern technology to enable them to assemble, in Uralsk, high-technology electrical and power distribution equipment - such as electrical substations, switchboards and distribution boxes – for use in the Karachaganak field. A 22-week training programme for Areal Omega staff is currently under way at Skema’s facilities in Italy.

Neftegazmash / PetrolValves: PetrolValves have completed two training programmes for personnel fro the Kazakh company. The first was held in Neftegasmash facility in Ust-Kamenogorsk and covered the assembly of ball valves, while the second course was conducted at PetrolValves facility in Milan and covered valve design, quality systems and manufacturing in accordance with International standards.