President Tokayev: The oilfield services industry can become a driver of the country’s economic growth

The development of oilfield services in the republic will push the growth of domestic small and medium-sized businesses, the creation of productive and skilled jobs, the localization of high value-added productions. The President of Kazakhstan, Kassym-Zhomart Tokayev, said this on September 5 in Atyrau, during a meeting on the development of the country’s Oil and Gas complex.

«Oilfield services industry can become one of the drivers of growth and diversification of the country’s economy. Increasing oil and gas production, we must create a modern oilfield services cluster following the example of Norway, where revenues from oilfield services exceeded revenues from hydrocarbon exports” Kassym-Zhomart Tokayev emphasized.

The head of state believes that the development of oilfield services will give impetus to the development of domestic small and medium-sized businesses, the creation of productive and skilled jobs, the localization of high value-added industries.

“Today, according to the projects of three large operators – TCO, NCOC and KPO – the share of local production in them is 34%. And for goods it does not exceed 7%. Meanwhile, the procurement volume of these companies is 4.6 trillion tenge and about 80% of purchases throughout the industry” said the President.

He noted that in the field of engineering and new technologies, the share of Kazakh companies is also low. The bulk of engineering and construction works are still carried out by foreign companies.

“The government, together with akimats, should strengthen work to increase the supply of domestic goods and services to Oil and Gas Companies. First of all, we need to increase the number of our companies in the engineering and construction of modular structures” said Mr. Tokayev.

According to him, if necessary, it is necessary to make appropriate changes to the legislation. For example, as for the Kalamkas-Sea and Khazar projects, it is necessary to ensure the use of domestic metal structures.

The President called on oil and gas companies to actively involve local Kazakh companies and local Kazakh specialists in their projects.

“To expand the financing of Kazakh oilfield services companies, I consider it necessary to provide for the possibility of obtaining a loan from banks or bank guarantees for contracts upon the availability of guaranteed contracts. This is the world’s practice” he said.

According to him, “a firm contract, for example, with TCO is the excellent security for any bank” and the National Bank of Kazakhstan “should pay attention to this problem”.

In addition, the head of Kazakhstan noted that it is necessary “to provide high-quality training and nurture the national staff- managers of Oil and Gas projects”.

At the same time, he drew attention to the fact that the development of the fuel and energy complex should be carried out without harming the environment, that favorable conditions were created for foreign investors in the republic, and that investors, for their part, must comply with internationally accepted ethical standards.

President Tokayev instructed the government, together with NCOC, to develop a roadmap for the development of the Kashagan field as soon as possible, as well as to implement the Future Growth Project in Tengiz and the Karachaganak Production Increase Project as scheduled.

He also noted that by the end of the year, it is necessary to complete work to expand the capacity of the Kenkiyak-Kumkol pipeline.

In addition, Kassym-Zhomart Tokayev instructed the government “to develop a geological exploration program by March 1, 2020, taking into account the forecast of long-term demand for mineral resources in the world.”