Sustainability

Local Content

To ensure delivery of the best goods, services and works for the Karachaganak operations we cooperate with a large number of contractors, vendors and counterparties both in Kazakhstan and worldwide. We acknowledge the impact of our presence in the West Kazakhstan region and contribute to local sustainability goals by developing local content and creating procurement opportunities.

KPO is one of the first companies in Kazakhstan that successfully introduced the Local Content Development Programme. KPO has an extensive supply chain with over 700 current suppliers with a pool of sub-contractors that perform a significant proportion of activities.

In 2020, KPO awarded contracts and contract amendments to over 500 contractors and suppliers, of which almost 80% where local entities.

Considering the achievement of 70% local content in works and services, the Company has focused on localization on production of goods.

Over the past few years, KPO introduced fundamental changes in its management approach in Local Content and went through major changes in local procurement from simple products to a number of high-technology goods and equipment. As a result of local content development activities, Qazaq producers have managed to improve their production capacities, and today supply KPO with separators, reservoirs, structural steel, tubular goods, electrical equipment, heat exchangers and much more.

In 2020, KPO local content development initiatives have led to achieve the following results:

  • Local Content share in Karachaganak project reached 59.3% (US$ 586.7 mln) for 2020, as shown in the graph below.
  • 33% of total goods procured by KPO are locally produced (US$ 45.5 mln) with 16.2 % Local Content share confirmed by the SR-KZ Certificate1.

Local Content share in total KPO procurement of goods, works & services, 2014-2020

KPO gives the highest priority to Local Content share increase in terms of goods locally made in Qazaqstan. Stable growth of indicators is achieved due to measures intended to localize goods which have been actively implemented since 2014.

In 2020, 20 contracts for a total value of US$ 4.3 mln were awarded to produce goods in Qazaqstan for the Karachaganak project, such as heat exchangers, mechanical components, valves, containers for storing cylinders, spare parts for pig launchers/receivers, air coolers, caustic storage tanks, compressor separator, tilted plate separator and flotation tank.

1A certificate confirming that the product was produced or processed on the territory of Qazaqstan. This certificate is intended for circulation on the territory of Qazaqstan, for example, when participating in the procurement of subsurface users or in public procurement.