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A. Khassenov: "Local Content Expansion and Localization of Goods in Kazakhstan is a Strategic Task for KazMunayGas"

15.10.2024

On October 15, Aktau hosted the Business Opportunities in the KazMunayGas Projects – the forum supporting local content. The event was attended by more than 100 country's producers from all regions of Kazakhstan.

In his speech, Askhat Khassenov, Chief Executive Officer of NC KazMunayGas JSC (KMG), noted the importance of production localization in the oil and gas sector.

The participation of Kazakh producers in major KMG projects plays a key role in the country's economy development, creating new jobs and making Kazakh products competitive.

“Local content expansion and localization of goods is not just a priority, but a strategic task to which KazMunayGas pays special attention. We strive to create the necessary conditions in which domestic producers will be able not only to compete with imports, but to offer high-quality solutions for our oil and gas projects,” emphasized A. Khasenov.

Since the beginning of the year, the KazMunayGas Group has procured goods worth more than KZT350 billion, of which over KZT250 billion is the share of products from domestic producers. This is 72% of the total procured goods.

At the business forum, Kazakh producers demonstrated the types of transformer, cable, chemical, and petrochemicals they produce. In turn, representatives of KMG subsidiaries demonstrated samples of imported equipment and goods used in production that fully or partially can be replaced for local products.

Oil companies offered potential partners projects worth KZT334 billion to localize production in Kazakhstan, and KZT20 billion in Zhanaozen.

Businesses were also offered to open oilfield service centers to provide oil equipment repair and maintenance services. Demands for goods and services for large oil and gas projects (Development of the Kalamkas-Sea, Khazar fields, Polyethylene Production Complex, and Construction of a Gas Separation Complex) was discussed as well.

After the forum, offtake contracts have been concluded between KazMunayGas subsidiaries and Kazakh suppliers:

  • Between Embamunaigas JSC and Atyrau Oil Service LLP on production of petroleum equipment (linear drive systems for sucker-rod pumps) in the amount of over KZT1 billion;
  • Between Pavlodar Refinery and INTERTRANS C.A LLP - on production of alkylate (high-octane gasoline component) in the amount of over KZT51 billion.

Additionally, a memorandum on organization of foundry production in the Mangistau region was signed between Ozenmunaigas JSC, the Akimat of the Karakiyansky district and JSC KazPetroDrilling (Kaskor-Mashzavod LLP) to increase the local value share in production of oil wells equipment.

Totally, since the beginning of 2024, KazMunayGas has concluded 107 offtake contracts with the local suppliers for a total amount of more than KZT58 billion. Their total share is expected to reach 55% by the end of the year. 

Background information 

Offtake Contract is an agreement between the customer and supplier for supply of goods that the supplier plans to produce in the future, on pre-agreed terms of cost, quantity (volume) and delivery time (RK Law No. 47-VII On procurement of Certain Entities of the Quasi-public Sector dated 8 June 2021 RKL).

JSC NC KazMunayGas

On October 15, Aktau hosted the Business Opportunities in the KazMunayGas Projects – the forum supporting local content. The event was attended by more than 100 country's producers from all regions of Kazakhstan.

In his speech, Askhat Khassenov, Chief Executive Officer of NC KazMunayGas JSC (KMG), noted the importance of production localization in the oil and gas sector.

The participation of Kazakh producers in major KMG projects plays a key role in the country's economy development, creating new jobs and making Kazakh products competitive.

“Local content expansion and localization of goods is not just a priority, but a strategic task to which KazMunayGas pays special attention. We strive to create the necessary conditions in which domestic producers will be able not only to compete with imports, but to offer high-quality solutions for our oil and gas projects,” emphasized A. Khasenov.

Since the beginning of the year, the KazMunayGas Group has procured goods worth more than KZT350 billion, of which over KZT250 billion is the share of products from domestic producers. This is 72% of the total procured goods.

At the business forum, Kazakh producers demonstrated the types of transformer, cable, chemical, and petrochemicals they produce. In turn, representatives of KMG subsidiaries demonstrated samples of imported equipment and goods used in production that fully or partially can be replaced for local products.

Oil companies offered potential partners projects worth KZT334 billion to localize production in Kazakhstan, and KZT20 billion in Zhanaozen.

Businesses were also offered to open oilfield service centers to provide oil equipment repair and maintenance services. Demands for goods and services for large oil and gas projects (Development of the Kalamkas-Sea, Khazar fields, Polyethylene Production Complex, and Construction of a Gas Separation Complex) was discussed as well.

After the forum, offtake contracts have been concluded between KazMunayGas subsidiaries and Kazakh suppliers:

  • Between Embamunaigas JSC and Atyrau Oil Service LLP on production of petroleum equipment (linear drive systems for sucker-rod pumps) in the amount of over KZT1 billion;
  • Between Pavlodar Refinery and INTERTRANS C.A LLP - on production of alkylate (high-octane gasoline component) in the amount of over KZT51 billion.

Additionally, a memorandum on organization of foundry production in the Mangistau region was signed between Ozenmunaigas JSC, the Akimat of the Karakiyansky district and JSC KazPetroDrilling (Kaskor-Mashzavod LLP) to increase the local value share in production of oil wells equipment.

Totally, since the beginning of 2024, KazMunayGas has concluded 107 offtake contracts with the local suppliers for a total amount of more than KZT58 billion. Their total share is expected to reach 55% by the end of the year. 

Background information 

Offtake Contract is an agreement between the customer and supplier for supply of goods that the supplier plans to produce in the future, on pre-agreed terms of cost, quantity (volume) and delivery time (RK Law No. 47-VII On procurement of Certain Entities of the Quasi-public Sector dated 8 June 2021 RKL).
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