The share of local content in the procurement of goods by oil and gas operators over the last three years has reached 28% of the total procurement by oil and gas operators.
Association of the service companies of Kazakhstan (KazService) has prepared an analysis of the procurement of goods by oil companies carried out in 2016-2018. Thus, over the past three years, subsoil users have purchased goods worth 1.3 trillion tenge, almost 30% of which are accounted for domestic producers.
“From 2016 to 2018, Kazakhstan oil companies increased the volume of procurement of goods by 10%. Goods produced by Kazakhstani companies were purchased for 369.4 billion tenge, which is 28% of the total amount for the three‑year period. At the same time, the share of the local content in 2018 reached 29.6%,”KazService reported. Thus, in 2016, domestic suppliers sold goods to oil and gas operators for 108.3 billion tenge, which amounted to 24.9% of the total annual volume of oil procurement. Next year, the share of Kazakhstani content increased by 10 billion tenge and reached 118.5 billion tenge or 28.8%. In 2018, the supply of Kazakhstani goods to oil producers increased by 22 billion tenge and amounted to 142.4 billion tenge or 29.6%.
Indicator | Volume, billion tenge | ||
2016 | 2017 | 2018 | |
Total procurement of goods | 434.2 | 412 | 480.8 |
including КС | 108.3 | 118.5 | 142.4 |
Share of KC | 24.9% | 28.8% | 29.6% |
According to Association of the service companies of Kazakhstan, the most popular products include pipes, chemical products, fuels and lubricants, electricity and more.
In total, oil companies procured goods worth 1.3 trillion tenge during the specified period.
Top 10 commodity items in terms of procurement, billion tenge
No. | Segment | Procurement volume | КС | Share of KC |
1 | Pipes | 286.4 | 45.9 | 16% |
2 | Chemical products | 227.6 | 93.4 | 41% |
3 | Fuels and lubricants | 125 | 67.9 | 54% |
4 | Valves | 88.3 | 5.4 | 6% |
5 | Electricity | 81.2 | 78.4 | 96% |
6 | Pumps | 79.2 | 19.6 | 25% |
7 | Generators, compressors | 77.6 | 1 | 1% |
8 | Cable products | 50.9 | 3.3 | 7% |
9 | Downhole equipment | 38.8 | 0.9 | 3% |
10 | Building materials | 33.6 | 15.1 | 45% |
At the same time, the level of Kazakhstani content (KC) does not reach half of the total volume of procurement in most commodity items.
“Close to 100% Kazakhstan’s electricity and natural gas production points to raw material dominance,”experts say.
Thus, Kazakhstani product purchased the most by oil and gas companies was electricity – 78.4 billion tenge or 96% of the total volume of procured products. The second is natural gas: the share of Kazakhstani content – 92%, the amount – 17.5 billion tenge, and the third – fuels and lubricants: 54% or 67.9 billion tenge of local content.
Top 10 products with the largest share of KC, billion tenge
No. | Segment | Share of KC | Procurement of KC | Total procurement |
1 | Electricity | 96% | 78.4 | 81.2 |
2 | Natural gas | 92% | 17.5 | 18.9 |
3 | Fuels and lubricants | 54% | 67.9 | 125 |
4 | Beam pumping unit | 45% | 2.5 | 5.5 |
5 | Building materials | 45% | 15.1 | 33.6 |
6 | Transformers | 42% | 2.4 | 5.8 |
7 | Chemical products | 41% | 93.4 | 227.6 |
8 | Pumps | 25% | 19.6 | 79.2 |
9 | PPE | 24% | 3.9 | 16.6 |
10 | Special machinery | 22% | 2.7 | 12.1 |
Meanwhile, high-tech products used in the oil and gas industry are still imported from abroad.
For example, downhole equipment was procured for 38.8 billion tenge, and the share of Kazakhstani products amounted to only 2.5% or 987 million tenge. Subsoil users procured IT products for 27.5 billion tenge, and Kazakhstan’s similar goods were purchased for 34 million tenge.
Top 10 products with the smallest share of KC, billion tenge
No. | Segment | Share of KC | Procurement of KC | Total procurement |
1 | Mobile units | 0% | 0 | 6 |
2 | IT products | 0.12% | 0.034 | 27.5 |
3 | Frequency converter | 0.63% | 0.034 | 5.3 |
4 | Electric equipment | 0.78% | 0.117 | 14.9 |
5 | Drilling bit | 0.79% | 0.055 | 6.9 |
6 | Throttles | 1.16% | 0.063 | 5.4 |
7 | Generators, compressors | 1.33% | 1 | 77.6 |
8 | Metal goods | 1.42% | 0.101 | 7.1 |
9 | Repair kit | 2.21% | 0.427 | 19.3 |
10 | Downhole equipment | 2.54% | 0.987 | 38.8 |