What kind of work is carried out by KPO for the development of local content and localization of production of OEM goods

At the Forum “Localization of Original Equipment Manufacturing” held on September 20 in Atyrau, Deputy General Director of Karachaganak Petroleum Operating B.V. (KPO) Marat Karimov presented a brief overview of the company’s achievements in the development of local content in goods, works and services over the past three years. He also spoke about approaches and strategies in localizing the goods of original equipment manufacturers as part of the KPO Local Content Development Program.

Karachaganak in numbers. The Karachaganak field was discovered in 1979. Since 1997, the consortium invested $ 25 billion in the project. The field produces 45% of all gas and 16% of all oil and condensate produced in the republic.

KPO indicators for local content (LC). In 2018, the percentage of local content in the total volume of procurement of goods, works and services made 60%. Since 2016, the company was awarded contracts for the development of production of 22 categories of goods in the amount of $ 61 million and 29 types of work and services in the amount of $ 490 million.

Localization of goods: from simple to technological. Given the achievement of LC in the amount of 70% in works and services, KPO focuses on the localization of goods.

Localization of OEM (Original Equipment Manufacturer). In response to a request from the authorized body of the Republic of Kazakhstan, PSA LLP, KPO, in accordance with its strategy, determined an “expanded list” of 33 constant-demand goods supplied by Original Equipment Manufacturers (OEM) and companies that are not original equipment manufacturers.

Localization status of goods of original equipment manufacturers.  Potential products are identified and opportunities for their localization, including partnerships, are examined.

KPO’s approach to localization of goods of original equipment manufacturers. The company works individually with each manufacturer. The target area of the KPO approach to localization of goods is determined.

The interaction required to implement localization. KPO is ready to make a commitment to purchase a minimum level of goods produced in Kazakhstan. In turn, Kazakhstani government bodies and associations should be prepared for investment in the development of local manufacturers. It is necessary to exempt manufacturers from customs duties and provide tax incentives for the import of raw materials and spare parts, equipment and machinery necessary for production in Kazakhstan.

Original equipment manufacturers should identify local manufacturers interested in cooperation and localization, invest in modernization or new production facilities, and transfer technology and knowledge and experience. Local manufacturers, for their part, should be ready to modernize production capacities and develop a strategy for the future development of the company for the production of new goods. Identify the original equipment manufacturer interested in cooperation and localization, conduct negotiations, and ensure compliance with OEM specifications.

Photo: KPO page on facebook.com