How much did Kazakhstani companies earn providing services to oil and gas operators

Oil and Gas Strategic Partnership Development Council (Petrocouncil) provides Kazakhstani companies with the information on the orders for the supply of goods, works and services placed by oil and gas operators in 2018. These data should help domestic enterprises in choosing a strategy for the development of production, which in turn will contribute to an increase in the share of local content in the procurement of subsoil users.

It should be noted that, in 2018, the total volume of procurement of goods and services in the oil and gas industry of the republic reached KZT 6 trillion (USD 16 billion), which is 30% more than in 2017. At the same time, 77% of all procurement are accounted for three major oil and gas operators: Tengizshevroil (TCO) LLP, North Caspian Operating Company (NCOC) and Karachaganak Petroleum Operating (KPO).

Who produces the most

According to KazService, in 2018, the total volume of procurement of goods and services compared to 2017 increased by 30% and amounted to KZT 6 trillion. At the same time, TCO, NCOC and KPO alone procured goods, works and services for 4.6 trillion, which is 77% of all costs.

The oil sector increased transfers to the National Fund of Kazakhstan by 60% or up to KZT 3.2 trillion. Tax payments of oil service companies exceeded KZT 370 billion. The number of employees in the oilfield services industry reached 180,000 people. TCO headed the top 10 largest oil producers with a production level – 28.6 million tons per year. NCOC ranks second with production – 13.2 million tons and the third is KPO – 12.1 million tons. See Table 1.

Table 1. TOP 10 oil producing companies of Kazakhstan in 2018

No. Company Oil production (ton) Tax payments (billion KZT) Procurement (billion KZT) Staff
1 Tengizchevroil 28.6 1,951 4,006 3,813
2 NCOC 13.2 103 361 2,683
3 KPO 12.1 680 272 4 102
4 Mangistaumunaigaz 6.3 373 336 4,446
5 Ozenmunaigaz 5.4 194 180 9,283
6 CNPC-Aktobemunaigas 3.8 181 130 5,604
7 Embamunaigas 2.8 146 70 3,055
8 Kazgermunai 2.7 108 46 757
9 Karazhanbasmunai 2.1 112 73 2,312
10 Buzachi Operating 1.3 40 14 913

The dynamics of procurement in the oil and gas industry shows annual growth. If, for example, the volume of procurement of goods, works and services amounted to slightly more than KZT 3 trillion, then, next year, this figure increased to KZT 3.4 trillion. In 2016, it has already reached KZT 4.5 trillion.

At the same time, TCO, NCOC and KPO remain the largest customers of oilfield services. In 2014, they procured goods, works and services for KZT 1.5 trillion, in 2015 – KZT 2.1 trillion and in 2016 – KZT 3.3 trillion.

Construction

According to the Association of oil service companies of Kazakhstan, the market of Kazakhstan oilfield services last year exceeded KZT 2.8 trillion, which is KZT 500 billion more than in 2017. The share of local content was 51%. Of the five key market segments – construction and installation works, drilling, design and engineering, maintenance and expertise, geology and geophysics – the largest volume of orders Kazakhstani oil service companies received in the field of construction and installation works. The share of local content in this area reached 78%. Least of all, domestic companies are represented in the design and engineering industry – 12%. See Table 2

Table 2. Kazakhstan’s oilfield services market

  Procurement, billion KZT KZ Share (%)
Segment 2016 2017 2018  
Construction and installation works 888 1,032 1,519 78%
Drilling 349 418 372 64%
Design and engineering 334 493 517 12%
Maintenance and expertise 218 252 252 46%
Geology and geophysics 253 135 186 16%
Total: 2,042 2,330 2,847 51%

Top 20 largest oil service companies in 2018 included only three fully Kazakhstani companies and two joint ventures. At the top of the the rating is the South Korean Daewoo Shipbuilding & Marine Engineering Co., Ltd (DSME), which received a total of orders for the supply of steel work for KZT 539 billion or more than USD 1.4 billion. A British company –KPJV, which is general contractor for the TCO Future Growth Project in Tengiz, ranks second. The company earned KZT 284 billion on engineering. TenizService Kazakhstani company ranks third. It received an order for construction and installation works in the amount of KZT 204 billion.

DSME alone received 35.5% of the orders of the oil and gas construction market in 2018. At the same time, more than 88% of these types of work in the amount of USD 1.3 trillion was ordered by TCO. See Tables 3, 4

Table 3. Top 10 companies providing construction services

No. Companies Sum, billion KZT Share (%)
1 Daewoo Shipbuilding & Marine Engineering (DSME) 539.2 35.5
2 TenizService 203.9 13.4
3 ErSai Caspian Contractor 194.2 12.8
4 Senimdi Kurylys 85.4 5.6
5 Consolidated Contracting Engineering & Procurement (CCEP) 69 4.5
6 GATE Inshaat 55.8 3.7
7 Sicim 44.8 3
8 Kazakhstan Caspian Offshore Industries (KCOI) 25.9 1.7
9 Kazcomservice 23.3 1.5
10 Bonatti S.p.A. 23.2 1.5

Table 4. Top 10 customers of the oil and gas construction market

No. Subsoil user Sum, billion KZT Share (%)
1 TCO 1,342.5 88.4
2 NCOC 69 4.5
3. KPO 55.3 3.6
4 Zhaikmunai 12 0.8
5 Mangistaumunaigaz 9.7 0.6
6 Embamunaigas 6.4 0.4
7 Ozenmunaigaz 5.5 0.4
8 KMK Munai 3.3 0.2
9 CNPC-Aktobemunaigas 2.9 0.2
10 KAZPETROL GROUP 2.8 0.2

Drilling

The Kazakh-American company KMG Nabors Drilling Company earned the most in 2018 on the drilling market – KZT 56.9 billion, with more than 15% of the market orders. Kazakhstani companies Burgylau and Oil Services Company received 11% share of market orders. Almost half of the drilling operations, which includes the construction and repair of oil and gas wells, cementing, well servicing and workover, were paid by Mangistaumunaigaz, Ozenmunaigas and TCO. See Tables 5, 6

Table 5. Top 10 companies providing drilling services

No. Company Sum, billion KZT Share (%)
1 KMG Nabors Drilling Company 56.9 15.4
2 Burgylau 43.8 11.8
3 Oil Services Company 43.4 11.7
4 TulparMunai Service 19.7 5.3
5 Xibu Drilling Engineering Company 30.9 8.4
6 KMG Drilling & Services 25.4 6.9
7 OzenMunaiService 13.8 3.7
8 Vostok neftiservisnoeobsluzhivanie 17.1 4.6
9 Sino-Kazakhstan Great Wall Drilling Company 11.9 3.2
10 SMART-Oil 11.6 3.1

Table 6. Top 10 customers of drilling services

No. Subsoil user Sum billion KZT Share (%)
1 Mangistaumunaigaz 62.1 16.8
2 Ozenmunaigaz 61.9 16.7
3 TCO 59.1 16
4 CNPC-Aktobemunaigas 28.9 7.8
5 Karazhanbasmunai 23.8 6.4
6 Firm Almex Plus 15.5 4.2
7 KPO 13 3.5
8 SOUTH OIL 11.6 3.5
9 Embamunaigas 11.1 3
10 Petro Kazakhstan Kumkol Resources (PKKR) 8 2.2

Design and engineering

Meanwhile, one of the lowest shares of Kazakhstani oilfield service companies is in the field of design and engineering. Here, mainly, foreign companies provide their services. For example, last year, more than half of all orders were implemented by the British company KPJV. More than 90% of the work was ordered by TCO. See Tables 7, 8

Table 7. Top 10 companies providing design services

No. Company Sum, billion KZT Share (%)
1 KPJV 283.6 54.8
2 Mustang Engineering Limited 73.6 14.2
3 Nuovo Pignone SRL 42.2 8.2
4 Worley Parsons & KGNT 13.4 2.6
5 Tecninco Engineering & Caspy Engineering 11.1 2.1
6 Wood Group 3.8 0.7
7 KMG Project LLP 3.3 0.6
8 Bechtel Limited 3.1 0.6
9 PM Lucas Kazakhstan 3 0.6
10 Genesis Oil&Gas Consultants Ltd 2.7 0.5

Table 8. Top 10 customers of design services

No. Subsoil user Sum, billion KZT Share (%)
1 TCO 471.6 91.2
2 KPO 27.7 5.4
3 NCOC 3.7 0.7
4 Caspi Meruerty Operating Company BV (CMOC) 3.5 0.7
5 Ozenmunaigaz 2.6 0.5
6 ZHAIKMUNAI 2 0.4
7 Embamunaigas 1.7 0.3
8 PKKR 1.1 0.2
9 Kazakhturmunai 1 0.2
10 Kazgermunai 0.6 0.1

Geophysics and geology

In the field of geological and geophysical studies of wells, seismic exploration, formation hydraulic fracturing, increasing oil recovery, the bulk of the work is also performed by foreign companies. The three leaders, who have spent more than half of the allocated funds – more than KZT 92 billion, are the French Schlumberger, the Chinese BGP and the American Baker Hughes. More than a third of the orders were given by TCO, followed by KPO (15%) and the Kazakhstani company Ozenmunaigaz (8%) – a subsidiary of JSC NC KazMunayGas. See Tables 9, 10

Table 9. Top 10 companies providing geophysical services

No. Company Sum, billion KZT Share (%)
1 Schlumberger 64.4 34.2
2 BGP Geophysical Services 20.4 10.8
3 Baker Hughes services 14.9 7.9
4 M-Tekhservis 10 5.3
5 Halliburton 9.2 4.9
6 Weatherford Kazakhstan 8.8 4.7
7 CNLC International Kazakhstan Inc 8.2 4.4
8 MunaiFieldService 7.2 3.8
9 Warner Land Surveys 3.6 1.9
10 Expro Eurasia Limited 3.5 1.9

Table 10. Top 10 customers of geophysical services

No. Subsoil user Sum, billion KZT Share (%)
1 TCO 67.7 36
2 KPO 28.7 15.2
3 Ozenmunaigaz 16.3 8.7
4 Mangistaumunaigaz 15.1 8
5 CNPC-Aktobemunaigas 11.1 5.9
6 ZHAIKMUNAI 7.8 4.2
7 NCOC 6.8 3.6
8 PKKR 6.4 3.4
9 Zhambyl Petroleum 5.7 3
10 Firm Almex Plus 3.1 1.7

Maintenance and repair

The largest order executed by the Kazakhstani oil service company in 2018 belongs to the sphere of maintenance and repair. Neftestroiservice LLP performed works for more than KZT 38 billion, which is more than 15% of the market of maintenance and repair. The secondcompany in the rating – a British company Denholm-Zholdas– earned KZT 8 billion less. And the company that closes the three leaders is the Italian PERAR SPA, which provided services for KZT 26 billion. More than 83% of all work was ordered by TCO, followed by NCOC (8.8%) and KPO (4.2%). See Tables 11, 12.

Table 11. Top 10 companies in terms of services volumes

No. Company Sum, billion KZT Share (%)
1 Neftestroiservice Ltd 38.4 15.2
2 Denholm-Zholdas 30.2 12
3 PERAR SPA 26.1 10.3
4 GE Grid Gmbh 15.1 6
5 MRC Transmark Limited 13.7 5.4
6 Siemens SAS 12.1 4.8
7 Hi Air Korea Co, LTD 11.3 4.5
8 Emerson Process Management Ltd 10.9 4.3
9 Galperti Engineering and Flow Control 10.8 4.3
10 FAI Officine Di Carvico Spa 9.9 3.9

Table 12. Top 10 customers providing maintenance services

No. Subsoil user Sum, billion KZT Share (%)
1 TCO 211.7 83.9
2 NCOC 22.1 8.8
3 KPO 10.6 4.2
4 PKKR 2.7 1.1
5 Mangistaumunaigaz 1.9 0.8
6 Embamunaigas 1.6 0.7
7 KMK Munai 0.4 0.2
8 Ozenmunaigaz 0.3 0.1
9 Maten Petroleum 0.1 0.1
10 Kolzhan 0.1 0.1

Procurement of goods

In the structure of procurement of goods for 2018, the largest share of Kazakhstani content is in such goods as electricity. Oil and gas operators paid more than KZT 28.6 billion for it, and the share of local content exceeded 95%. Also, from Kazakhstan’s goods, subsoil users purchased in a large volume fuels and lubricants – KZT 51 billion (48%) and construction materials – KZT 10.6 billion (45%). At the same time, 79% of all pipe products, 97% of generators and compressors, more than 93% of valves are imported. See Table 13

Table 13. Structure of procurement of goods for 2018 (top 19 positions)

No. Type of goods Procurement, million KZT Local content (%) Import (%) Share of type of goods (%)
1 tubulars 111.5 20.9 79.1 19
2 chemical products 88.4 40.1 59.9 15.1
3 lubricants 51.1 48.4 51.6 8.7
4 valves 29.9 8.7 91.3 5.1
5 pumps 29.5 30.4 69.6 5.0
6 electricity 28.6 95.2 4.8 4.9
7 generators, compressors 16.4 3 97.0 2.8
8 wellhead equipment 15.1 8.2 91.8 2.6
9 constructional materials 10.6 45.3 54.7 1.8
10 IT products 9.9 0.3 99.7 1.7
11 measurement instrumentation 9.1 4.7 95.3 1.6
12 cable products 8.6 7.8 92.2 1.5
13 repair kit 8.4 2.6 97.4 1.4
14 personal protective equipment 6 23.6 76.4 1.0
15 capacitive equipment 5.5 29.7 70.3 0.9
16 downhole equipment 5.1 16.6 83.4 0.9
17 filtering or purifying equipment 4.8 5.2 94.8 0.8
18 special machines 4.7 15.8 84.2 0.8
19 couplings 4.4 1.5 98.5 0.8

Foto: tengizchevroil.com