16-10-2017

Kazakhstan International Oil and Gas Exhibition KIOGE was held on October 4-6, 2017, in Almaty. Over 250 companies from 25 countries were the participants of this unique event, and most of them were the representatives of the national oil and gas industry. From the moment of its establishment KIOGE has been held with support from the Ministry of Energy of the Republic of Kazakhstan, the Akimat of Almaty, National Company KazMunayGas, and the Association of the Service Companies of Kazakhstan. The extensive interactive platform was arranged for discussion of the relevant issues of the national and international oil and gas industry.

The reports of the key speakers, such as Makhambet Dosmukhambetov, First Vice Minister of Energy of the Republic of Kazakhstan; Murat Mukashev, Deputy General Director of Tengizchevroil; Zhakyp Marabayev, Deputy Managing Director of NCOC; and Murat Zhurebekov, General Director of PSA, were presented during the conference.

Rashid Zhaksylykov, Chairman of the Board of the Association of the Service Companies of Kazakhstan, was the main speaker who outlined the urgent issues existing in the sphere of Kazakh oilfield services. During his speech he mentioned 3 categories of programs existing in the national oil market.

Firstly, the market of the country is non-competitive for the Kazakh business due to presence of quasi-public sector. In other words, National Company KazMunayGas manages the creation of subsidiary oilfield service companies that are preferred for procurement and, therefore, they receive long-term orders under high-margin projects, such as Tengiz, Kashagan, and Karachaganak. This situation limits the development of the Kazakh companies that spend years trying to get a chance to take part in implementation of complex projects.

Secondly, the issue of the stabilized contracts of TCO, KPO, and NCOC was also mentioned since 75% of all procurement in the oilfield services belong to these three giants. Considering these numbers, it is highly important to engage Kazakh companies for participation in tenders of the mentioned projects. However, since the tender procedures are non-transparent, only invited companies are allowed to participate. Remarkably, in most cases the contractors of the operators are foreign companies since the Kazakh ones have no required experience and current assets. However, reasonable segmentation of the work and services would make maximum engagement of the Kazakh business quite possible,

Thirdly, the problem of private subsurface users mainly including Chinese oil-producing companies was also mentioned. Despite the transparency of their procurement, all large contractor operations are performed by the companies with Chinese foundation capital. Therefore, it leads to reduction of the local content which is unacceptable for the national economics. In addition, the speaker noted the fact of extremely low salaries in the companies where the Chinese participation share is dominant. As the speaker noted, the solution of all mentioned problems requires multifaceted and collective approach to them.

Concluding his speech Rashid Zhaksylykov mentioned the issue of the governmental support of the local oilfield service development. According to him, the possibility of the service export to the foreign markets depends on the level of such support.

Summarizing the oilfield service market data it is possible to say that at the moment the national oilfield service includes thousands of companies, 160 thousand employees, and over 200 billion tenge of annual tax revenues.

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