Petrocouncil.kz starts a series of analytical articles about the role of large foreign companies operating in the O&G industry of Kazakhstan; how they have been contributing to the development of the industry, local content, and human capital. We think that it would be interesting to learn about the role of foreign EPC and service companies. Today we start with the case study of Kazakh branch of the Italian company Bonatti.
HISTORY OF THE COMPANY
The history of Bonatti started in 1946. The company has over 70 years of experience in the O&G and energy industries. Bonatti had projects in Algeria, Canada, France, Iraq, Mexico and other countries around the world. We can say that the company worked on almost all continents of the planet.
In Kazakhstan, the Italian brand appeared in 1999 as the “Bonatti S.P.A. – Kazakhstan branch. Since that time, this branch has been providing EPC for the O&G and power plants in Kazakhstan. The company is considered to be large one according to Kazakhstani legislation, employing up to 1000 people. It is located in the Atyrau region and the company is managed by Christian Burizzi.
Bonatti S.P.A. has been one of the major contractors of such giants as TCO, KPO and NCOC. During its history in Kazakhstan, the company has successfully implemented several projects. For example, on March 6, 2015, a multibillion-dollar contract to replace the Kashagan pipeline was awarded to Bonatti.
The company ensured that the facility was operational prior to the official award by completing preparatory and early work, including logistics support, temporary construction sites, winterization plans, and mobilization of personnel and equipment.
At Kashagan, Bonatti began digging trenches in shallow water in accordance with environmental restrictions. The dredging of the trench and floating channel of the main pipelines in shallow water (SER zone) was completed on September 4, 2015, 3 months ahead of schedule.
In 2018, Bonatti in consortium with Montazhspetsstroy JSC, received a contract for the construction of a pipeline from the Tengiz and Korolev oil fields for $500 million. These pipelines (section 51) were designed for FGP-WPMP to further increase total daily production from the Tengiz.
In April 2019, Karachaganak Petroleum Operating signed a more $200 mln contract with the abovementioned consortium for the implementation of the 4th gas re-injection compressor project. The contract includes the provision of engineering, procurement, and construction services. Since the beginning of the project to develop skills for safe work performance, increase efficiency, and labor productivity, the consortium has begun training local specialists.
BONATTI’S CONTRIBUTION TO THE KAZAKHSTAN
As a result of the training and mechanical testing, the consortium trained 35 local hand welders and 4 local operators who are involved in design, procurement, and construction. The share of local content development in 2019 at Bonatti S.P.A was 65%.
Earlier this year, Bonatti reported that the project had achieved 5 million working hours without incidents. The company also stated that more than 2300 people are involved in the project, including more than 90% of Kazakhstanis.
In addition, given the complexity of the project in such a complex area as Tengiz (in terms of environmental issues), Bonatti decided to establish its own Craftsmen Training Center, where more than 2,800 people were trained. Bonatti S.P.A, like all foreign companies during the coronavirus pandemic supported local medical centres by purchasing various equipment.
As Radio Azattyk wrote, in 2008, at the construction of Agip KCO’s oil processing plant in Karabatan in the Atyrau region, over a thousand workers held a protest action over working conditions and the lack of rotational work instruments. Among the workers were Bonatti employees. Subsequently, the company introduced a rotational work.
As the website ‘Ak Zhaiyk’ wrote, in May 2011, a fuel spill was done by Bonatti on the territory of the ‘Bolashak’ plant. Agip KCO demanded from Bonatti to clean up the contaminated area, but Bonatti did not accept the claims from the former customer. Meanwhile, the Department of Ecology of the Atyrau region imposed a large fine on Agip KCO for this spill. In turn, Agip froze payments to “Bonatti for the performed works and as a result, Bonatti owed to its subcontractors.
The analysis carried out by the specialists of Kazekoproekt LLP (contractor of the Agip KCO company) confirmed 100% contamination with oil products. Bonatti S.p.A recognized the contamination of groundwater in the amount of 310 cubic meters where an administrative case was initiated under article 250 of the Administrative Code of the Republic of Kazakhstan (“Damage to the land). Later the case was sent to the Makat District Department of Internal Affairs who refused to initiate a criminal case due to the lack of evidence. As a result, Bonatti had only an administrative penalty in the form of two fines totaling about 500 thousand KZT (more than one thousand USD).
In addition, according to the open data Sud.kz, Caspian Offshore Construction Realty (COCRO filed a lawsuit against Bonatti for improper performance of its contractual obligations. The lawsuit was related to the issue of staff accommodation at the FGP project. The case went so far that the property of the Bonatti S.p.A. company was seized by a court ruling dated August 25, 2020 at the request of Caspian Offshore Construction Realty for the amount of 4 169 475 301 tenge (approx. $9 700 000 mln)
However, in connection with the approval of the settlement agreement between the two parties, the court decided to terminate the civil case from September 22, 2020, and on September 25, the court received a statement from ‘Bonatti’ on the cancellation of measures to secure the claim in connection with the approval of the settlement agreement. At the hearing, the plaintiff’s representative asked to refuse to satisfy the application.
In addition, Kazakh SMEs had questions for Bonatti about the company debt to its subcontractors.
According to Assylbek Jakiyev, the chairman of Petrocouncil, representatives of various local SMEs contacted the organization on an issue of Bonatti’s debts to them.