KPO is developing the potential of local vendors

March 15, 2012, Kapital.kz

The oil and gas industry has been one of the most important sectors of the economy.  The balance of the interests of production companies and the state is supported by the favourable investment climate that has been created in Kazakhstan. In turn, mineral resource developers are contributing to the development of the areas in which they operate. For example, KPO are following their obligations to increase the participation of local companies in the project.

As is known, the final production sharing agreement that regulates relations between the Karachaganak investors and Kazakhstan was signed 15 years ago.  Since that time, the companies that are part of the consortium, which include the BG Group, Eni, Chevron and LUKoil have invested about $16 bln into the development of the Karachaganak field.  During this time, the KPO company has been consistently implementing the nationalisation and local content development programmes.

“The developed relationships help enhance the potential of local enterprises and firms by creating conditions allowing them to increase their contribution into the field development,” says Kairat Kapashov, KPO Local Content Development Controller.  Local companies are supported in terms of obtaining certificates in quality management, occupational safety, environment, technical standards and project management.  Through a consistent increase in qualifications of their personnel, local companies are gradually increasing their competitiveness”.

“As a result, during the last 15 years, long-term agreements and contacts have been concluded between KPO and local companies.  The figures are very impressive; as during the history of the operation of Karachaganak, KPO’s database has added over 2,500 Kazakhstani suppliers.  They have rendered services for a value of over $4 billion.  Last year, local content in the project constituted 38%, or $268 mln.  At the same time, KPO applies a unified method for the calculation of local content, approved by the government of Kazakhstan.”

“Another important step is being made in enhancing the local suppliers programme.  On company’s website KPO posts annual, mid-term and long-term plans for contracts that are expected to be tendered.  This provides a chance to any local company to prepare in advance with sufficient quality and take part in each tender.  This transparent and consistent reporting allows local suppliers to develop their own strategy to comply with the requirements of the largest employer in the region.”

In February 2012, the National Innovation Fund JSC and Castle Oil and Gas Fields Services LLP, which specialises in transfer of new technology -- signed a memorandum for the development of technological parks in Kazakhstan based on the concept of the Aksai Industrial Park.  One of the goals of such cooperation is a complex contribution to the development of high-tech and science-intense products and the National Innovative Fund’s participation in the charter capital.

KPO is very actively involved in huge efforts to increase innovative activity in the country.  In 2011, the KazEnergy Association, KazMunayGas, KPO, the North Caspian Operating Company B.V and Tengizchevroil organised a joint forum in Astana titled ‘Production of Complex Equipment and Spare Parts’.  The forum’s participants discussed mechanisms to support the domestic market for the production of goods and services for the oil and gas sector, as well as stimulating business contact for local and foreign companies in Kazakhstan.

Over 100 Kazakhstani and foreign companies took part in the forum.  They were provided with specifications on needed equipment and spare parts, as well as requirements for increasing local content. At the present time, KPO is finalizing preparations for another forum ‘Kazakh Content’, which will take part in Astana on March 20th.

The KPO consortium has big plans.  Economic and technical research exists on opportunities to increase production volumes, which means creating new jobs and bigger scale cooperation with national firms. According to Deputy Akim of the West Kazakhstan Oblast Gumar Dyusembaev, KPO applies various forms of interaction with its Kazakhstani partners.

An expert group was created together with the consortium with the task of designing the programme for developing local companies.  Through this mechanism, all goods and services related to the field have been carefully analysed. The main goal of the Aksai Industrial Park is to increase the entire assortment of required highest quality products at local companies, according to Kapital.kz.