A joint forum on localization of chemicals production was held in Almaty

A joint forum on localization of chemicals production was held in Almaty
ALMATY, November 19, 2018 – Kazakhstan’s major oil and gas field Operators – National Company KazMunaiGas JSC (‘KMG’), Tengizchevroil LLP (‘TCO’), North Caspian Operating Company N.V. (‘NCOC’) and Karachaganak Petroleum Operating B.V. (‘KPO’) held a joint forum on localization of production chemicals in collaboration with Oil & Gas Strategical Partnership Development Council. The main objective of the Forum is to stimulate growth and develop the domestic market of chemical products amid high and stable demand in oil and gas projects. The Forum brought together domestic and international suppliers and manufacturers of chemical products to share information on the needs and demands of the Operators, and to find new opportunities to develop the chemicals production sector in Kazakhstan.

According to Azamat Kushekov, NCOC Process and Engineering and Technology Team Lead, the event is held as part of the efforts to implement the initiatives of the Aktau Declaration, signed in 2012 by four major Oil and Gas Operators. A working group was created to assist and support companies in ensuring compliance with the Operators’ standards and technical requirements. He emphasized that among the objectives of the Forum is to familiarized current and potential suppliers with the North Caspian project, advise domestic companies on the Consortium’s short and mid-term needs for industrial chemicals and focus their attention on the plans of the North Caspian project to increase local content in chemicals production. Mr. Kushekov stated that NCOC utilizes a thorough process of selecting industrial chemicals and potential suppliers, and also encouraged the participants to take advantage of the Forum as a platform to discuss cooperation in localizing chemicals production directly with NCOC representatives. In the meantime, Mr. Kushekov reminded that the company applies a systematic approach and adopted a long-term strategy with clear objectives to develop local content. NCOC gives preference to local companies over foreign contractors, subject to their compliance with qualification requirements established by the North Caspian Production Sharing Agreement and the availability of competitive goods and services. It should also be mentioned that NCOC assists local companies in transition to international standards and in strengthening partnerships with international companies by way of creating joint ventures. A special program of training local companies to international standards is successfully implemented, and as a result hundreds of Kazakhstani companies are certified to the standards of the International Organization for Standardization (ISO).

Daniel Zholdybayev, TCO Domestic Market Development Director, stated that localization of chemicals production implies the development of local companies that produce chemicals using international technology. This will contribute to attracting foreign investment, technology transfer, establishing joint ventures and transfer of professional experience and knowledge.

The Forum presented an overview of the projects of the North Caspian, Tengiz and Karachaganak fields to familiarize with their demands in various types of chemicals in the short and mid-term perspective. More than 100 companies from different regions of the country took part in the Forum where they widely shared information on business opportunities. As a result, the Forum participants put forward their proposals and ideas on establishing chemicals production facilities in Kazakhstan.

Paolo LiturriPaolo Liturri, KPO, KPO Contracts and Procurement Controller mentioned that objective of the forum is to discuss the local content development opportunities while there is stable demand in chemicals for the existing and upcoming Karachaganak expansion projects. “KPO has been taking vigorous efforts to involve local companies into more complex works through facilitated cooperation between international and Kazakhstani companies with a view to create new jobs and assist in technologies’ transfer, as well as the creation of new production capabilities in RoK. Over the last few years, KPO has made drastic changes in the nature of procurement of goods from simple products to more complex high-technology goods and equipment, Made in Kazakhstan. KPO believes that today’s forum provided an effective platform for discussing new investment opportunities - the creation of chemical production or business expansion to supply the long-term needs of O&G projects in RoK”, – added Paolo Liturri.

According to Assylbek Jakiyev, official representative of Atameken National Chamber of Entrepreneurs on cooperation with Oil and Gas Operators (TCO, NCOC, KPO) and development of oilfield services, all market participants can benefit from this Forum. “As you know, the Aktau Declaration is represented by a working group on a voluntary basis, which includes authorized representatives of Oil and Gas Operators and industry stakeholders. All participants recognize the essential role of social and corporate responsibility. The Chamber of Entrepreneurs of Atyrau oblast, among other things, supports the main goals and objectives of the Aktau Declaration. In turn, we are ready to assist and serve as a platform for negotiation between business and local executive authorities in the event of any questions,” said Mr. Jakiyev. Oil and Gas Sector Strategic Partnership Development Council’s quarterly meetings will become such a platform. The Council will coordinate the actions of over 50 major petroleum companies and oilfield service enterprises, numerous unions, councils and other alliances, involving Atameken, KazEnergy, RoK Ministry of Energy, RoK Ministry of Investment and Development, PSA and other stakeholders. The Council aims to improve the efficiency of consolidated work and eliminate duplicate actions.

The event organizers expressed confidence that this forum would encourage domestic enterprises to identify promising areas for developing new production and localizing chemicals sector in accordance with international standards. This would increase the local content in all current and future oil and gas projects. Additionally, the Forum participants noted the high level of organization of the event and its extraordinary efficiency.

The facilitators:

Oil and Gas Industry Strategic Partnerships Development Council
 The Oil and Gas Strategic Partnership Development Council is a consultative and advisory cooperation of legal entities that coordinates all unions, councils and other alliances affiliated with The National Chamber of entrepreneurs "Atameken", KazEnergy, The Ministry of Energy, of Investment and Development, PSA and other organizations. The Council aims to increase the efficiency of consolidated work and eliminate duplicative efforts and tasks.

NC KazMunaiGas JSC
 National Company «KazMunaiGas» – Kazakhstani Operator for exploration, production, processing and transportation of hydrocarbons, representing the interests of the Government in oil and gas sector of Kazakhstan. 90% shares of KMG belongs to Sovereign Wealth Fund «Samruk-Kazyna» JSC, 10% of shares to National Bank of Kazakhstan.

«Karachaganak Petroleum Operating B.V.»
 KPO oversees the expansion and development of the Karachaganak oil and gas condensate located in north-west Kazakhstan covering an area of over 280 square kilometers. It holds estimated hydrocarbons initially in place (HIIP) of about 13 million barrels of liquids and 60 trillion cubic feet (tcf) of gas, of which approximately 11% of liquid (condensate and oil) and 12% of gas has been recovered to date. The Karachaganak Venture brings expertise and knowledge from five oil & gas companies – ENI (29.25 per cent), Royal Dutch Shell plc (29.25 per cent), Chevron (18 per cent), Lukoil (13.5 per cent) and KazMunaiGas (10 per cent). In 1997, Venture partners set out with the former State Oil & Gas Authority to develop the vast reserves of Karachaganak. They signed a Final Production Sharing Agreement (FPSA) which will see the partnership operate Karachaganak until 2038. Since signing this agreement they have invested over $22 billion in the operations and have applied industry leading hydrocarbon technology to one of the world’s most complex reservoirs.

«North Caspian Operating Company N.V.»
«North Caspian Operating Company N.V.» acts on behalf of seven partners of the consortium as Operator estimating and developing hydrocarbon reserves on eleven offshore blocks within North Caspian Production Sharing Agreement with amendments and additions dated 18th November 1997. The consortium members have the following shares: “KMG” - 16,88%, “Eni” 16,81%, “ExxonMobil” - 16,81%, “Shell” - 16,81%, “Total” - 16,81%, CNPC – 8,33%, “INPEX” - 7,56%.

Tengizchevroil LLP
 Tengizchevroil LLP is a Kazakhstani partnership that explores, develops, produces and markets crude oil, LPG, dry gas and sulfur. TCO conducts its operations in accordance with world-class safety and environmental standards. In April 1993, Tengizchevroil was formed between the Republic of Kazakhstan and Chevron Corporation. Current partners are: Chevron Overseas Company, 50 percent; KazMunaiGas NC JSC, 20 percent; ExxonMobil Kazakhstan Ventures Inc., 25 percent; and LukArco B.V., 5 percent. The Future Growth Project-Wellhead Pressure Management Project (FGP-WPMP) are two integrated projects implemented by TCO simultaneously. FGP implementation will allow to increase Tengiz crude oil production capacity by approximately 12 million tonnes per year or 260,000 barrels per day and the overall Tengiz crude oil production capacity will be approximately 39 million tonnes per year or 850,000 barrels per day. While FGP implementation will expand production, WPMP will keep the existing Tengiz plants at full capacity by lowering wellhead pressure and boosting the pressure of the six existing processing trains.