March 27, 2013, Delovoy Kazakhstan (Almaty) by Anna Elas
The development of the Karachaganak oil and gas field plays an important role in the social reconstruction of the West Kazakhstan Oblast. Karachaganak Petroleum Operating BV strictly complies with its obligations to increase local content with the real participation of the local business community and industrial enterprises in the implementation of Karachaganak project orders.
For instance, there was a working meeting of the Entrepreneurs’ Association in the WKO and industrial companies in the region with Karachaganak Petroleum Operating BV (KPO) in mid-March. The main purpose of the meeting was to acquaint industrial enterprises with the company’s manufacturing facilities and the state of affairs for the Karachaganak field development. The delegation received detailed information on the company’s operational results and the import substitution programme.
In particular, KPO Manager for Local Content Development Kairat Kapashov drew the visitors’ attention to the company’s active participation in the development of Kazakh suppliers through a number of initiatives.
As part of the local content development, KPO, together with the Entrepreneurs’ Association is implementing a project in the WKO to localise the production of spare parts and services with regional companies. This project is designed to create conditions for the long-term development of in-demand goods and services production by local businesses for the oil and gas industry.
Kairat Kapashov said, “KPO is implementing projects that contribute to making sure the spare parts and equipment needed for daily production at Karachaganak are produced in Kazakhstan. This encourages the joint collaboration of western and domestic manufacturers, and provides a positive environment for the development of Kazakh companies and the creation of a high-tech industry in Kazakhstan. The use of Kazakh goods and services is a priority for the company and has a positive impact on the development of the regional and national economies”.
KPO sees stimulating the development and competitiveness of domestic goods and services suppliers as a cornerstone for enhancing local content. Besides the fact the approach is motivated by the need to improve the logistics process, the quality of goods and services and reduce costs, it also has great socio-economic importance.
The advantages of a diversified and competitive supplier base extend far beyond the Karachaganak field. These bring long-term benefit to the economy and regional farms. KPO seeks to develop the professionalism and production potential of Kazakh companies in terms of their compliance with international standards. It is working to establish and maintain long-term relations with the Kazakh business community.
In turn, President of the Entrepreneurs’ Association in the WKO Anis Istelyuev said, “We had an important meeting with the KPO management for local content development. We talked of the potential of our industrial enterprises to manufacture products meeting KPO’s requirements. In turn, the company has expressed interest in supporting local suppliers, small and medium-sized businesses, as well as in further cooperation with the Entrepreneurs’ Association in the WKO for local content development”.
KPO was one of the first companies in the Republic of Kazakhstan to successfully introduce a local content programme. The Domestic Suppliers’ Development Programme made it possible to involve more than three thousand Kazakh enterprises in the development of Karachaganak. These enterprises generally receive orders worth more than US $4 billion from KPO. In the previous year, the percentage of local content in KPO’s contracts for goods, work and services reached 56 percent, or US $336 million.
Following the meeting, the parties involved agreed to take concrete, practical steps to increase the goods and services provided by local companies.
Karachaganak Petroleum Operating BV (KPO) is a joint venture of BG Group (29.25%), Eni (29.25%), Chevron (18%), LUKoil (13.5%) and KazMunaiGas NC JSC (10%). KPO manages the expansion and development of the Karachaganak field, one of the largest oil fields in the world.
The Karachaganak field is located in northwest Kazakhstan, occupying a territory of over 280 square kilometres. Its initial reserves of oil, gas and condensate (HIIP) are 9 billion barrels of condensate and 48 trillion cubic feet of gas, with estimated total reserves of over 2.4 billion barrels of condensate, and 16 trillion cubic feet of gas.
Since the signing of the FPSA, KPO’s parent companies have invested more than US $17 billion into the development of the Karachaganak field, using the most advanced production technology to produce maximum sustainable economic benefits. Compared with similar companies, KPO is top ranked in terms of gas utilisation. Its gas utilisation in 2012 was 99.87 percent, which is a world-class achievement.