– Marat Shaidollayevich, KPO company is one of the major investors in the Kazakhstani economy. Economic and social wellbeing of the Western Kazakhstan region directly depends on successful development of the project. How does the company feel under the circumstances of world oil prices decline?
– The changed situation in world markets forced us to change our plans. We understand that we need to muster our internal resources, review and optimize costs. However, we have no doubt that all the investors’ obligations to the Republic of Kazakhstan will be duly fulfilled. Just recently the company held a workshop for the representatives of international and local manufacturers to discuss the needs for Karachaganak Expansion Project, Phase 1. This workshop was attended by the representatives of state authorities and specialized associations such as PSA LLP, NADLoC agency, KAZENERGY association, Alliance of Kazakhstan service companies. Thus, the work on expansion Project continues as planned, as well as on other investment projects.
– Could you give us any more detail about how the company establishes its relations with local vendors and how Kazakhstan based manufacturers can become KPO contractors or vendors?
– Since signing the Final Production Sharing Agreement in 1997, the total amount of the contracts concluded between the consortium and Kazakhstan based companies exceeded $5.3 billion. In 2014, local content in Karachaganak project comprised 47% of the total purchase expenditures or 472 million USD in cash terms.
Such a high performance is the result of the KPO local content development program. We assist local companies to obtain ISO certificates on quality management, HSE, technical API standards, ASME and project management, therefore increasing their competitiveness.
Furthermore, local content requirements are also applied to foreign contractors. Their contracts envisage the obligations for observing local content requirements, experience, technology transfer and assistance in professional development of local personnel. I can share a number of examples among KPO initiatives, having been implemented recently: as a result of negotiations. A contract extension in favour of Tenaris Company was approved in return for investment liability on construction of premium-class pipe threading factory at the territory of the Republic of Kazakhstan with the investment scope amounting to 40 million USD. Early signed memorandums of understanding with General Electric and Aksai industrial park have also been successfully implemented.
General Electric, jointly with Samruk-Kazyna WKEC (West Kazakhstan Engineering Company) is at the approval stage of establishing a joint venture in Uralsk city subject to GE standards and principles under GE brand. As part of Aksai Industrial Park services are rendered on repair of heat exchangers, assembly of ball valves as well as fabrication of heat insulation materials and materials for passive fire protection. At the present time, KPO is conducting pilot early tenders for personal protective equipment delivery, fencing as per international standards and placing pilot orders for delivery of chemicals, packing cement, drilling bits and barite. Manufacturing of these goods within the territory of Kazakhstan is a compulsory condition for conducting early tenders and placing pilot orders.
It should also be mentioned that KPO openly gives access to its annual, midterm and long-term plans for goods, works and services purchase at its official website. We hope that this information enables Kazakhstan based companies to find out solutions to set up production of goods, works and services required by KPO beforehand and to become our long-term vendor. Any company, which is hoping to work with KPO, should fill in the Preliminary vendor assessment questionnaire at KPO webpage: www.kpo.kz, attach copies of the required documents and send the completed documentation pack by email to: MIVQ@kpo.kz. The Company, which successfully passes preliminary assessment, is registered in KPO Vendor database and is notified by KPO feedback tools. As of today more than 3600 local companies have been registered in the KPO database. Assessment and registration of the vendors allows them to be enrolled into the list of selected vendors and the list of tender participants to proceed with tender or other further procedures.
– The “Green bridge” partnership program initiated by the President of the Republic of Kazakhstan is aimed at establishing international partnership and mechanisms of transfer of “green” knowledge, innovations and technologies. How is Karachaganak, being such a huge industrial producer, integrated into “green economy”?
–KPO remains committed to meeting the highest Health, Safety and Environmental protection standards. One of the key obligations undertaken by KPO is to apply best environmental practices, contributing to the sustainable development of the region and country as a whole. Activities oriented to emissions’ reduction, waste management and deployment of new technologies are among the company’s focus areas. The gas utilization indicator at Karachaganak field is 99.97 per cent which is at the leading edge of worldwide oil and gas industry performance. Karachaganak is also among the first fields, having successfully implemented the technology of gas reinjection into the reservoir, constituting significant environmental benefits.
Meeting the highest standards has always been a key driver for our activity. For instance, power generators at Karachaganak processing complex are equipped with the dry combustion system which makes them one of the most environmentally friendly power stations. Environmentally sound technology “Green Burner”, which excludes emissions of hazardous particles into the atmosphere during well testing, has been successfully used for several years at Karachaganak field. Its core principle is to ensure air injection by compressors into the combustion area thus facilitating more efficient gas flaring with zero soot in place.
Within the framework of the Kyoto protocol KPO undertook an obligation to reduce its greenhouse gas emissions. A benchmarking study based on data from an international association of oil and gas companies confirms that at the moment Karachaganak gas utilization indicator per hydrocarbon unit is 20 per cent lower than statistical average of that in Europe and by almost two thirds lower than worldwide average indicator.
During the current year an energy audit of the company was carried outby an independent third party. The findings reinforced the assessment that KPO is one of the most energy-efficient complexes in the oil and gas industry.
Over the last ten years KPO has invested approximately 300 million USD for implementation of environmental protection measures. Protection measures cover not only the production sphere but protection of the region’s flora and fauna. The strategy of the Karachaganak investors fully corresponds to the objectives of “green economy”, building on which the President Nursultan Nazarbayev called as one of the top priorities of State policy.
– Resettlement of Berezovka village residents to multi-storied block of flats in Aksai town commenced in the end of November 2015. This project is implemented by West-Kazakhstan oblast authorities with financial contribution of KPO. Could you tell us more about this resettlement?
– In May 2015 the Government of the Republic of Kazakhstan approved the enlargement of the sanitary-protection zone around the Karachaganak field. KPO fully supported this decision to support the future further development of the facility. The newly estimated sanitary-protection zone encompasses the villages of Berezovka and Bestau. As a result the government is leading the resettlement of the villages. KPO and partner companies of Karachaganak project are providing full assistance and support to the local authorities in planning the successful implementation of the relocation project. The company has involved leading international experts to ensure the project follows international standards of best practice.
As of today, all the residents of Berezovka and Bestau villages have been provided with detailed information on the relocation project and were consulted with on all the available options. The resettlement process will be managed by the Akimat of Western-Kazakhstan oblast. During the First Stage of relocation 82 families will receive flats in two multi-storied blocks. 200 applications were submitted for Second Stage relocation to multi-storied blocks of flats in Aksai and 90 families applied for detached houses with a land plot in Araltal village.
– Cooperation with local community is an essential requirement for sustainable development of any company. Where does KPO stand in this respect?
– The Company pays constant attention to the issues of cooperation and interaction with local communities in the region, where it operates. This interaction includes constant implementation of social projects, meeting the needs of the local residents. In order to build a constructive dialogue with local population, Village Councils have been set up and public hearings are conducted. A program has been developed for those living in Aksai and villages adjacent to the field. For instance, English classes are conducted for young people and training for teachers of English language. For many years KPO has been financing health resort tours for veterans and summer holidays for children. The Company is also addressing various school and cultural centers’ issues.
The Company is implementing different large-scale projects aimed at development of social infrastructure of the Western Kazakhstan oblast. Annually 20 million USD are allocated for implementation of these projects. Karachaganak investments have had a beneficial effect on the social welfare of the Western Kazakhstan oblast. It should be mentioned that the list of projects and their priority are determined by Akimat of Western Kazakhstan oblast. Construction of health care, educational and sports facilities are performed as a part of the KPO social program. Moreover, all the projects are implemented with involvement of Kazakhstani contractors only. Recently a number of large-scale social projects have been implemented in the oblast, for example road repairs in the oblast centre and landscaping of the right bank of Chagan river in Uralsk city Recreation Park. Two streets are being upgraded in Aksai, which is the administrative centre of the region, as well as overhaul of Burlin region central hospital. The water supply system is being reconstructed in two Burlin villages.
As a part of the XXI World Petroleum Congress held last year in Moscow, KPO company was awarded the KAZENERGY Association medal for its contribution to the development of mutually beneficial cooperation. This is recognition of company’s achievements in respect to sustainable development of the region. Finally, I would like to point out that KPO adheres to the principles of sustainable development. Standing for social-responsible partnership, KPO will continue to seek new and even greater production achievements for the benefit of the Republic of Kazakhstan and partners of Karachaganak project.
Marat Karimov has been working as Vice General Director of Karachaganak Petroleum Operating B.V. (KPO) since August 2015. Immediately before this assignment, Marat Karimov worked as Deputy Akim of Western Kazakhstan oblast. Marat Karimov graduated at the Atyrau Institute of oil and gas and also studied at the universities of Oklahoma and Louisiana. His professional career in oil and gas industry started up in 1994. Over the previous years he worked as Director of North-Caspian project of KazMunaiTeniz IOC JSC and afterwards as Deputy General Director of the same company, Deputy General Director of KMG Kashagan B.V., General Manager of exploration projects of KazMunaiGas OC JSC.