By Sergei SMIRNOV
Relations with the rural population and authorities might be of good use for stable project development, but could also turn out to be a source of ongoing problems for oil companies. One of the leading investors, Karachaganak Petroleum Operating B.V. resolves this problem through conducting a personnel nationalisation programme along with the implementation of its social development policy for Priural’e.
The main gas producer in Kazakhstan - Karachaganak Petroleum Operating B.V. (KPO) which is developing the eponymous Karachaganak oil and gas condensate deposit, has changed its personnel policy. While it was organising and developing the infrastructure at Karachaganak, the production processes were managed by specialists from foreign companies. Now however, after its move to operational stage, the majority of its staff are Kazakhstani citizens.
KPO General Director Roger Fox believes that the professional development of the local personnel is one of the priorities for the company’s operations. Nurgali Ashimov, akim of the West Kazakhstan Oblast says, “This company not only participates in developing the Karachaganak deposit, but it is also the largest employer in the region.”
The Karachaganak deposit has initial reserves amounting to over 1.2 billion tonnes of oil and condensate, and over 1.35 trillion cubic metres of gas, and is located in the West-Kazakhstan Oblast. It is being developed by a consortium that includes the British BG, the Italian Eni (both owning 32.5%), the American Chevron (20%) and the Russian LUKoil (15%).
The total amount of the consortium’s investments is over $4.3 billion, and the timeline for the Product Sharing Agreement was agreed upon until 2038. The investments that are expected to be made into social projects during this timeframe will approximate one half billion dollars, and the number of Kazakhstanis who will have built their professional career and life with KPO’s assistance will reach tens of thousands of people.
Karachaganak is a career
The main trend for the Kazakhstani personnel’s participation in this project is its intellectual development. During the implementation of the first stage of the deposit’s operation, which began in 2000 (see Appendix 1) the personnel structure consisted of employees from varied specialties. Nearly 20,000 workers were brought in at the height of the construction season, out of which, 80% were Kazakhstani professionals. Over 500 national companies received contracts for the supply of goods and services.
At present, other personnel development programmes are also ongoing under the project. Local employees at KPO are being trained as part of the International Management Qualification programme, to enhance their managerial skills. The programme helps them to acquire valuable knowledge for further career growth. The training period lasts for one year and a half. Expenses for each student totals approximately $12,000.
Earlier, workers at the company’s Production Directorate were trained together with foreign and local professionals through the two-year programme called Management for Supervisors. The International Management Programme that trained an earlier group of KPO officials allowed them to assume high-ranking managerial positions at the company.
“The principal goal for today and the future is to effectively operate KPO’s production capacities, and to market the finished products,” Mr. Roger Fox says. “In order to achieve this goal, KPO is creating a team of Kazakhstani specialists through training them. Their number will continue increasing, and in due course, they will be taking on more important positions.”
A Common language
The personnel nationalisation programme that KPO designed along with the Ministry of Energy and Mineral Resources of Kazakhstan is a broad one (see Appendix 2), but the peculiar thing about the programme is its series of measures that are aimed at supporting and developing the state language.
Several seminars devoted to conducting paperwork in the Kazakh language were given with KPO’s support. Participants in the seminars studied terminology, translation techniques, and mastered necessary skills for using special computer programmes.
Management at the company are multilingual, but the most-often spoken languages are Kazakh, Russian and English. Language abilities are an indispensable precondition for being promoted and therefore the number of people who want to learn the state language is increasing exponentially.
KPO is funding various educational programmes so that Kazakhstanis could enjoy starting conditions that equal to those of foreign specialists. One of these is support provided to students at local educational establishments majoring in the oil and gas sector, and who are not employed by the company.
KPO provides a one-time scholarship for the students in the two last courses, and invites them to engage in a practicum at the company. The company provides books and other learning materials for western Kazakhstani institutes, and equips rooms at the universities. Thus, KPO is seeking to increase the material and technological base of the national education system, as well as the personal preparedness of graduates.
As a rule, families with good income can provide their children with excellent education. Therefore, the Karachaganak operator has created a business incubator and business centre in Aksai city in cooperation with the local authorities of Burlin district and the Damu (Development) West Kazakhstan Association of Entrepreneurs.
Their goal is to assist people who have made up their mind to start their own business. Newly-created enterprises are provided with premises on preferential terms, economic and legal consulting is provided and the SME theory is taught. This project has nothing to do with oil and gas production at Karachaganak, but it makes a great resource for people living in the region where KPO operates, which is why the company has developed it.
The Social side of the coin
KPO contributes $10 million annually into the social development of Priural’e. The social projects are carried out solely by local construction companies. The company assisted in building an ice palace, the Kazakh Drama Theatre, and a family-style children’s village. KPO’s funding also assists in building or reconstructing healthcare and education facilities; the targets for the investment are usually chosen by the local authorities.
Currently, Kazakhstan’s main goal is to become one of the 50 most competitive nations in the world. In order to achieve this goal, professionalism on the part of working people is crucial. Thousands of Priural’e residents have gone through a professional training school while working at the Karachaganak deposit, and the number of trainees will continue growing as the prestige of a technical education in the region increases along with the project development.
An outlook for the project
The Karachaganak deposit was discovered in 1979. A relatively small amount of gas and condensate began to be supplied via pipeline to the oil refinery in Orenburg in 1985. The government of Kazakhstan began talks with the consortium partners on signing a Product Sharing Agreement back in 1992. Five years later, KPO received 40-year operation license.
The first stage of project exploration began in 2000. In addition to the construction of the new facilities for processing gas and liquefied hydrocarbons as well as gas re-injection, production capacities remaining from the Soviet period were modernised during the first operational stage, and over 100 wells went through an overhaul and a 100 mwt capacity power station was built.
In addition, the 635 km Karachaganak-Bolshoy Chagan-Ayrau export pipeline that connects the Caspian Pipeline Consortium was built, which allows for transporting the Karachaganak oil to ports on the Black Sea in Novorossiysk.
During this period of time, KPO has achieved ecological indicators that meet international standards, and has met its obligations for the development of the social sector. The consortium will make $10 million in investments each year during the entire 40 years of the effective agreement.
The purpose of KPO’s personnel nationalisation programme, which has been approved by the Ministry of Energy and Mineral Resources and the Ministry of Labour and Social Security is the multi-directional development of local specialists at the company for the systematic and ongoing replacement of foreign employees.
The programme includes:
designing individual career and training development plans;
organising training, in particular teaching foreign and Kazakh languages;
evaluating the professional and managerial skills of workers forthe selection of applicants that are able to take over high-rankingpositions;
a tutorship programme;
a graduate training programme;
Following the training, certificates from organisations such as the Chartered Institute of Purchasing and Supply, the Chartered Institute of Personnel and Development, the Chartered Institute of Managerial Accounting and the Chartered Institute of Management are issued.