Kazcontent in TCO, NCOC and KPO: Depending on how you count

The theme of the development of Kazakhstani content is very relevant in recent years. Recently, during a meeting with citizens of Atyrau region, President Kassym-Jomart Tokayev noted that the share of local content in the procurement of goods, works and services by large oil and gas operators is very low and has not changed for many years. According to him, the volume of procurement of goods and services of Kazakhstani producers by operators of three major oil and gas projects amounted to only 34%.

What do these figures look like in monetary terms, for example, for 2018?

So, let’s take the three largest subsoil users as a guide: TCO, NCOC and KPO, whose total share is about 78% of the total procurement in the country.

Tengizchevroil (TCO), according to data published on the website of the company, purchased Kazakhstani goods, works and services for up to USD 3.5 billion in 2018. If we assume that is 34% of the total procurement of TCO over the past year, the operator, as it turns out, spent more than USD 7 billionon the procurement of foreign goods, works and services. Overall, TCO has spent USD 29 billionon the Kazcontentsince 1993.

In March of this year, speaking at the VIII annual conference “Kazneftegazservice-2019”, General Director of PSA LLP Murat Zhurebekov noted that in 2018, foreign content in the procurement of goods by Karachaganak Petroleum Operating B. V. (KPO) amounted to 88% and by North Caspian Operating Company (NCOC) – 73%.

The data of the representatives of the subsoil users themselves are slightly different. During the forum devoted to the presentation of the report on sustainable development of the company for 2018, Head of Local Content Monitoring & Reporting at NCOC,Nurbolat Tulemissov, reported that last year, USD 424 million was spent on the purchase of goods, works and services of Kazakhstani production, which is 43.4% of the total procurement of the North Caspian project. Does it mean that NCOC left almost USD 600 million abroad?

By the way, of these USD 424 million, as explained by the representative of the consortium, USD 12.2 million (27.3%) were spent on the purchase of Kazakhstani goods, USD 275.8 million – on works (56.3%) and USD 136 million – on services (31%).

In general, from 2004 to 2018, NCOC spent more than USD 14 billion on the purchase of Kazakhstani goods, works and services.

According to the data published on the KPO website, the company’s share of local content in the supply of goods, works and services reached 60% in 2018, which in monetary terms amounted to USD 474 million. So, does it mean that the operator spent more than USD 300 million on foreign goods, works and services?

“In general, since the signing of the FPSA in 1997, the share of local content in the procurement of KPO exceeded USD 7 billion,”says the statement published on the company’s website.

It is a simple arithmetic. It would be interesting to know from representatives of companies what exactly is included in the list of purchased goods, works and services. Because, according to those who prepare such reports, subsoil users include in the Kazakhstani content any expenditure that they make in Kazakhstan, even sponsorship money that they allocate for the construction of schools, kindergartens, as well as support for social projects.

Photo: bnews.kz