KPO placed orders in Kazakhstan for USD 50 million in the framework of the implementation of KGDBN Project

In Almaty, the shipment of modular substations manufactured in Kazakhstan by Schneider Electric LLP for KGDBN Project of Karachaganak Petroleum Operating B.V. (KPO) took place, the press service of the company reports.

In October 2017, KPO concluded a contract with Schneider Electric (SE), which is one of the world leaders in the production of electrical equipment, for the manufacture of five modular substations for KGDBN Project. As noted, SE attracted for their production a Kazakhstani partner — PSI Engineering LLP (Karasai machinery building plant).

As KPO General Director Edwin Blom noted at the ceremony, “the peculiarity of this contract is that previously such substations were manufactured abroad”, and it is “the first product manufactured in Kazakhstan”.

“KPO Local Content Development Strategy in KGDBN Project implemented with the direct support of the Ministry of Energy of the Republic of Kazakhstan and the Authorized Body, allowed to use Kazakhstani materials in the manufacture of substations, to use the capacity of the Karasai machine-building plant, to attract Kazakhstani specialists and to transfer technology and knowledge to Kazakhstani partners,” the head of the company said.

“We are proud to announce the transition to the final phase of the project for the supply of high-tech modular substations for KPO. These substations of Kazakhstan production were produced for the first time with advanced international technologies on the base of Karasai machine-building plant,” says Maksim Ageev, General Director of Schneider Electric LLP.

According to him, the project allowed SE to complement the company’s strategy, better understand the potential of Kazakhstani producers and expand its capabilities for the production of new products.

“We intend to continue to attract Kazakhstani machine builders,” he said.

Modular substation of Kazakhstan production have successfully passed integrated factory acceptance tests confirming compliance with the requirements of KPO.

According to Edwin Blom, “successful implementation of the KPO Local Content Development Strategy in KGDBN Project allowed KPO to place 18 direct orders to 10 producers from five regions of the Republic of Kazakhstan in the amount of about USD 52 million, which in turn allowed to provide domestic machine builders with additional volumes.”

Let’srecall that the major investment project – KarachaganakProcessingComplexGasDebottleneckingProject – started in September 2018. The agreement on project implementation was signed between the Authorized Body of the Republic of Kazakhstan – PSA LLP, with the support of the Ministry of Energy of the Republic of Kazakhstan, and the shareholders of the Karachaganak project –Eni, Shell, Chevron, LUKOIL and KazMunayGascompanies.

As explained then by the representatives of PSA LLP, thanks to KGDBN Project, the Karachaganak field will maintain the maximum level of production. The project with a budget of USD 1.1 billion should provide additional revenues to the budget of Kazakhstan in the amount of more than USD 3.2 billion until 2037.

“Within the framework of this project, the minimum share of local content in the procurement of goods, works and services will be 40% and 75% in the recruitment of personnel,” the Authorized Body said.

As explained, the project will allow to process additional volumes of sour gas up to 4 billion cubic meters per year. These volumes of gas will be used for re-injection into the reservoir to maximize the level of production of liquid hydrocarbons. It will also serve as a resource for the implementation of subsequent investment projects at the field.

“Negotiations with the consortium were quite difficult. Thanks to the active position of the leadership of the Ministry of Energy, we managed to achieve mutually acceptable conditions with the consortium and successfully complete the negotiation process. This project is characterized by the application of the so-called cost control mechanism, the essence of which is that the responsibility for the implementation of the project within the agreed budget and schedule falls on the consortium. And if they exceeded the agreed parameters of the project cost, such excess costs will be incurred by the shareholders of the project”, – said Murat Zhurabekov, former General Director of PSA LLP (Currently he holds the position of Vice Minister of Energy of the Republic of Kazakhstan –Petrocouncil).     


The Karachaganak project is being implemented within the framework of the Final Production Sharing Agreement concluded between the government of the Republic of Kazakhstan, the group of foreign companies represented by British Gas / Shell (29.25%), ENI (29.25%), Chevron (18%), LUKOIL (13.5%) and National Company KazMunayGas (10%).

Currently, the project is at the stage of field maintenance of Stage 2, which is characterized by keeping the annual production of about 11 million tons of liquid hydrocarbons and 16.5-17.5 billion cubic meters of gas achieved at Stage 2.