COVID-19 damage on Kazakhstan's oil and gas sector revealed

Business Materials 25 August 2020 14:24 (UTC +04:00)
COVID-19 damage on Kazakhstan's oil and gas sector revealed

BAKU, Azerbaijan, Aug.25

By Nargiz Sadikhova - Trend:

The COVID-19 pandemic has seriously affected Kazakhstan’s oil and gas sector, whereas drop in oil prices decreased payments to the state budget, Head of Kazakhstan’s Oil and Gas Strategic Partnership Development Council Assylbek Jakiyev told Trend.

“Furthermore, in accordance with OPEC+ agreement, the production of hydrocarbons was reduced by 20 percent throughout Kazakhstan. This also affected the volume of payments to the country’s budget, 44 percent of which account for oil and gas industry,” Jakiyev said.

For example, Jakiyev said, Tengizchevroil company has decreased direct payments to the budget by 30 percent in 1H2020.

“Most of all, coronavirus outbreak has affected production the Tengizchevroil-operated field - Tengiz. Tengizchevroil had to reduce the number of staff on the site to 13,000 (from over 45,000). Moreover, the virus lead to temporary halt of some operations within the Tengiz Future Growth Projet, leaving only critical work that is being carried out,” he said.

In Jakiyev’s words the pandemic has also made the company quickly reconsider the attitude to local content in procurement of goods, work and services.

“Many foreign contractors were unable to qualitatively carry out their activities due to the closure of the borders and, therefore, large operators turned to the local companies for help. NCOC convinced Emerson, General Electrics, Flowserve and PV-KIOS to take on the obligation to localize the production of certain goods,” he explained.

Jakiyev also added that in total the level of Kazakh content has remained at 30-40 percent for the longest time, and it is the localization of production that will help to mitigate the damage to economy.

“Currently Kazakhstan also puts a great emphasis on digitalization, for example, Atyrau Hub operates in the country’s western regions, where IT specialists, specialists in automation have means to develop new products for oil and gas industry, as well as apply them,” he said.

Jakiyev noted that companies such as KazMunayGas, Tengizchevroil, NCOC, conduct internal corporate accelerators, which help to increase economic efficiency and transform conservative production processes.

“I believe that development of engineering, further development of digital solutions, as well as increase in the number of renewable energy projects will help oil and gas industry to stand up to any future economic blows in Kazakhstan,” he concluded.


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