Kazakhstan, Astana, 19 Feb. / Trend D. Mukhtarov /
Currently, Kazakh producers are not capable of ensuring quick and efficient functioning of transnational oil and gas companies in terms of local content, the director of the Risk Assessment Group, Doctor of Political Sciences Dosym Satpayev said.
"Kazakh companies are not capable ensuring the quick and efficient functioning of transnational oil companies in terms of local content in major projects such as the development of Kashagan or Karachaganak," Satpayev told Trend.
He recalled that the Government of the country has been constantly putting pressure on investors since 2010, concerning the increase of local content, especially after adopting a new law 'On Subsoil and Subsoil Use' which tightened requirements for subsoil users, including for expanding purchases of Kazakhstani goods, services and attracting of workers.
According to official data, the companies, especially in the oil and gas industry, will be required to comply with the requirements of local content for staff by 90-100 per cent, for goods and materials by 50 per cent, for services and works by 90 per cent.
It is also known that by 2014 the country plans to increase the share of local content in the total amount of purchases of goods up to 60 per cent and work and services to 90 per cent.
In addition, as the political scientist highlighted, in January 2011 the Ministry of Oil and Gas of Kazakhstan announced new requirements for oil and gas companies systematically violating the rules of procurement of goods and services.
"In particular, it was decided to apply penalties, including termination of contracts to oil and gas companies, seriously violating legal requirements for local content," the expert said.
According to him, ever since then the oil ministry requested preparation of an effective programme for the development of local content and use of local expertise with an indication of graphics reflecting the annual replacement of foreign workers with Kazakh specialists.
In addition, expenditures for acquisition of goods, works and services by foreign companies outside Kazakhstan, as well as purchases made in violation of the law were excluded from the costs.
"The problem is that the Kazakh producers themselves are not prepared for such an increase in local content, especially when it comes to the supply of complex oil and gas equipment and highly skilled professionals. This requires time and strong government support for the development of local production and training," Satpayev said.
Last Thursday, executive secretary of the Ministry of Oil and Gas of Kazakhstan, Kanatbek Safinov, speaking at a forum of oil and gas companies entitled 'Oil and Gas: Kazakh Content 2013', said the Ministry of Oil and Gas intends to transfer part of procurement within the largest PSA (Production Sharing Agreement) projects, such as Kashagan, Tengiz and Karachaganak, to an electronic format in order to ensure maximum transparency.
Safinov added that performance indicators for the local content will be considered when applying for renewal of contracts for subsoil use.
"We will not consider proposals from subsoil users to extend the contracts within the expert committee and working groups given they have violated contractual obligations," Safinov said.
He recalled that the law stipulates that "any changes to the contract may only be introduced for those companies that perform their contractual obligations".
"The Ministry of Oil and Gas will accurately track these when it comes to local content," Safinov said
Safinov noted that main complaints of domestic producers to subsoil users are the unfounded refusal to accept bids with price proposals, non-admission to the opening procedure, breach of the deadline for submission of announcements of competitions and artificial delay in the conclusion of contracts.