Share of local content in Kazakhstan’s oil and gas projects remains small

Kazakhstan, Astana, October 7/ Trend, D. Mukhtarov /

As of 2012, the share of local content in the purchasing of goods In oil and gas projects amounted to 3-8 per cent in Kazakhstan, Deputy Chairman of the Board of "KazMunaiGas" (KMG) JSC NC Magzum Mirzagaliev said in Astana on Monday.

"Currently, we mainly relate the further growth of local content with the purchases of operators of large oil and gas projects - (Kashagan, Tengiz and Karachaganak), as the share of Kazakh content in purchases of these companies is low. Thus, as of 2012 the share of local content in the purchases of goods ranged from three to eight per cent, " Mirzagaliev said during the seminar on "Development of local content - international experience and best practices" within the VIII Eurasian Forum "KAZENERGY ".

He gave several reasons for the low level of local content in oil and gas projects.

"This is - the lack of familiarity with the industry standards, requirements, terminology and technology, lack of information about upcoming activities, a general lack of knowledge about the requirements for the quality, inconsistency of local products to the requirements of operators and the language barrier, "the representative of "KMG" JSC NC said.

He also added that a major obstacle for the growth of Kazakhstan's content in oil and gas projects is a conservative position of operators to prefer experienced suppliers and service contractors instead of local companies unknown to them.

"In addition, another factor that complicates the situation is that the design is carried out abroad, and the products of foreign producers are put on the design documentation when they are being designed," he said.

According to him, "KMG" JSC NC signed the Aktau declaration on joint actions with the major oil and gas operators - TCO (Tengizchevroil), NCOC (North Caspian Operating Company), KPO (Karachaganak Petroleum Operating) in order to increase the Kazakh content in large oil and gas projects.

"The document envisages the unification of standards and procedures for oil and gas operators, creating a unified database for Kazakhstan's industry , development of human resources and support to scientific and research work," Mirzagaliev said.

In addition, according to Deputy Minister of Industry and New Technologies Nurlan Sauranbaev, the Ministry of Industry and New Technologies of Kazakhstan takes a series of measures to increase local content in oil and gas projects

"In particular, new rules were adopted for the purchase of goods, works and services during subsoil operations; there was carried out work on the development of high-tech domestic service within major oil and gas projects; operative and transparent procedure for the purchase of goods by subsoil users is provided," Sauranbayev said.

According to him, as of the first six months of 2013, the overall increase in the share of local content in all subjects of monitoring amounted to 12, 2 per cent, or 726 billion tenge ($ 1 = 154.15 tenge) compared to the same period of 2011.

Nevertheless, he stressed that Kazakh producers receive some $30 billion worth of contracts from the state per year, which go to the development of national content.

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