The Ministry of energy told about works pertaining to increase of local content share in oil and gas projects

The Ministry of energy attaches great significance and carries out constant work pertaining to increase of local content share, – advised Makhambet Dosmukhambetov – Republic of Kazakhstan first deputy minister of energy – at press conference in Nur-Sultan.

According data of  vice-minister, according to outcome of first half-year of  2019 the mineral resources purchased goods, works and services in the total amount of 3,5 trillions of  KZT, local content herein made a little more than 44% in the amount of  1,5 trillions of  KZT.

In particularly, the oil and gas operators purchased Kazakhstan products for the amount of  129 billions of  KZT or more than 20% of  total volume equal to 623 billions of  KZT spent to purchase of  goods.

Concerning works Kazakhstan citizens appropriated 948 billions of  KZT or around 48,68% of all types of  works, to which operators spent 1,9 trillions of  KZT in total.

Besides, Kazakhstan companies performed services for petroleum operators in the amount of 459 billions of KZT, which makes almost 50% of total amount equal to 918 billions of  KZT appropriated in the field of services provision.

As a whole according to data of the Ministry of energy the last five years growth of local content is observed in oil and gas industry. In particular Kazakhstan share increased 1,6 times or from 74 billions to 120 billions of  KZT in the category of “goods”. Local content share in the category of  works increased 1,8 times: from 834 billions to 1,5 trillions of  KZT, in services – 1,1 times: from 771 billions to 835 billions of  KZT.

“Local content growth is fostered by systematic work of the Ministry of energy in implementation of legislative standards in particular, development of  the Code on mineral resources and legislative acts stipulating standards for support and development of domestic business in oil and gas complex”, – stated Makhambet Dosmukhambetov.

According to him development of  local content within Tengiz, Kashagan and Karachaganak projects has great significance; because 70% of purchase of  goods, works and services in the energy sector falls to three largest operators – Tengizchevroil LLP (TCO), North Caspian Operating Company (NCOC) and Karachaganak Petroleum Operating (KPO).

Whereas over the last five years local content share on Tengiz, Kashagan, Karachaganak projects: in goods increased 1,3 times – from 15 billions to 19 billions of  KZT; the local content share in works increased 2,1 times – from 552 billions to 1,2 trillions of  KZT, in services the share increased 1,2 times – from 307 billions to 390 billions of  KZT.

Vice-minister advised that over this period 43 joint enterprises/consortiums were established; the operators implemented mechanisms of early tender and signing of long-term agreements.

KPO implemented into tender procedures also the mechanism for holding of purchases among domestic companies i.e. without invitation of foreign companies for participation in the bid.

Concerning the Future growth project/wellhead pressure management of Tengizchevroil mr. Dosmukhambetov said that project cost is equal to 37 billions of  US dollars, 12 billions or 32% of which is Kazakhstan local content.

“Actual appropriation of  money since the beginning of the project is equal to 21,2 billions of  US dollars, actual amount of   purchase from Kazakhstan companies is equal to 6,3 billions of US dollars”, – he said.

Thus, local content share in goods is 8%, in works it is 40%, in services it is 26%. Average share of  local content in the Future growth project reached 29,6%.

Whereas more than one thousand of  Kazakhstan companies passed pre-qualification; 430 Kazakhstan companies were awarded more than 1000 contracts for works under the Future growth project.

TCO signed 31 contract with Kazakhstan manufacturers, 18 of  which did not previously work with TCO.

Over the period from commencement of the project 21 600 Republic of Kazakhstan citizens underwent specialized training in trade jobs. More than 48 thousands of  jobs were created for Kazakhstan citizens.

Large foreign services companies assumed the obligations to bring local content share: Bonatti from 65%, GATE from 80%, Velesstroy – 72%, Senimdi Kurylys – 73%, CCEP – 65%.