13-02-2018

On February 3, 2018, the Central Communications Service held a press conference for support of the main topic in the economic life of Kazakhstan - implementation of large-scale oil and gas projects.

Nowadays three major operators such as Tengizchevroil, Karachaganak Operating Company, and North Caspian Operating Company are implementing the projects with the total budget of minimum 45 billion US dollars. Inflow of foreign investments in the country makes it possible for the local companies to develop their competences within the established joint ventures and consortia. According to the terms and conditions set forth by the state, a subsurface user shall ensure transfer of the knowledge, technologies, and foreign experience to open the door to the world heritage for the local market. An important aspect of the bilateral interaction is the increase of the local content by participation of the Kazakh companies in large oil and gas projects. At the moment 75% of all oilfield service procurement in Kazakhstan belong to the three operators. According to the analysts, in the future this percentage will only increase. On the verge of such opportunities all participants shall be focused on reasonable use of the resources.

The mentioned numbers, availability of the investors, and the expected events in the oil and gas sector play a significant role in development of the national economics and, therefore, determine the topic of the event. The speakers of the briefing were Rashid Zhaksylykov, Chairman of the Presidium of the the Association of the Service Companies of Kazakhstan, Nurlan Zhumagulov, General Director of the Association of the Service Companies of Kazakhstan, Serbolat Shorayev, Chairman of the Board of Logic Services Kazakhstan, and Niyaz Zhumat, Project Manager of the Association of the Service Companies of Kazakhstan.

The presentations made by the Association were followed by many questions from the representatives of the mass media. Rashid Zhaksylykov, the main briefing speaker, mentioned a range of the current issues asking the public to pay attention to the high-potential projects. One of the points, the issue regarding cooperation with the operators to ensure maximum engagement of the national business in the current or future projects, was especially highlighted by the speaker. Unfortunately, the significant budget of the tenders does not allow the local companies to participate due to lack of the current assets and the required experience. For this reason the main contractors awarded with large project contracts are requested to establish joint ventures and consortia with the Kazakh enterprises. In this regard the KAZSERVICE association offers the competent bodies to establish effective collaboration with the global contractors since they are also the customers for the local oilfield service companies.

At the moment the oilfield service market of Kazakhstan includes over 1000 companies and minimum 170 000 employees. According to the estimates, the annual turnover of the oilfield services makes 2.2 trillion tenge per year on the average. In 2016 the companies of the sector paid 280 billion tenge of taxes. All these resources carry certain benefit and the main objective is maximize this indicator in the country.

Nurlan Zhumagulov, General Director of the Association, told about the new version of the Subsurface and Subsurface Use Code signed in December last year. According to his speech points, the Code will come into effect upon expiration of the 6-month period after its approval. The new Code specifies some rules, including the most important one concerning the requirements for the contractors and subcontractors to purchase from local manufacturers There is also a goal to achieve up to 50% of the local content in certain segments of the market. Nowadays the largest segment of the industry is the construction and assembly operations where the local content makes 80%.

Serbolat Shorayev, Chairman of the Board of Logic Services Kazakhstan, highlighted the Yamal project which is quite significant for Kazakhstan. It is a Russian project implemented on the shore of the Arctic Ocean. According to the speaker, 1500 citizens of Kazakhstan are participating in the project while 300-350 of them are the employees of Logic Services Kazakhstan. The company is engaged in electric installation and operates as a subcontractor under the project. The speakers noted that in the future the Yamal megaproject will become one of the main gas-production centers in Russia and the Kazakh companies will have new opportunities of participation in Russian petrochemical projects.

Niyaz Zhumat, Project Manager of the Association, continued the briefing by telling about some social issues, such as staff logistics, accommodation, water supply, and timely payment for subcontractor works, since all of these issues require collective approach. He especially highlighted that today the opportunity to participate in Tengiz and Karachaganak expansion projects makes it necessary to develop the measures of governmental support for the Kazakh business.

Closing the briefing, the speakers summarized their presentations by agreeing in one point: there is no doubt that the competition in the market stimulates the development of the local companies, however, it is important to make it fair for the local companies in a range of aspects. “To finish my speech, I’d like to mention to issue of the governmental support for the national oilfield service business. Today our local companies have to compete with foreign enterprises under unfair conditions since the foreign companies are released from import taxes and have access to financing,” Nurlan Zhumagulov added.

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