One of Tengizchevroil’s key priorities is to build the local capacity and capabilities of Kazakhstani businesses. TCO views our dedication to continuing to grow the use of Kazakhstani goods and services as supporting Kazakhstan’s sustainable development as well as good business.
TCO’s strategy in increasing our use of Kazakhstani goods and services centers on four elements:
- Creating opportunity
- Growing manufacturing and production capabilities
- Transferring skills
- Maximizing local employment
This focus has enabled us to increase our Kazakhstani goods and services spending tremendously. In 2012, 60 percent of our total in-country spend was spent with Kazakhstani companies.
Tengizchevroil actively works with the Republic of Kazakhstan, KazMunaiGas and industry unions such as the Union of Machine Builders of Kazakhstan to identify and capture opportunities for manufacturers in Kazakhstan. Further, TCO proactively identifies qualified suppliers to include in tenders and helps develop qualified suppliers where none exist. TCO uses loans and educational forums to support this effort. We also work hand-in-hand with companies to help them adopt international standards.
TCO placed a pilot order with Nitrogen Plant LLP for liquid nitrogen delivery in support of TCO’s KTL turnaround exercise. Nitrogen Plant LLP used equipment and personnel to TCO’s standards during the turnaround. Additional orders were placed with Nitrogen Plant LLP for upcoming maintenance & repair and infrastructure projects. In April 2012, TCO signed a master contract for nitrogen supply and blowdown of trunk pipelines as part of the SGP/SGI and KTL turnarounds.
HILL Corporation (HILL) plant produces high quality lubricants. The plant is the first of its kind in Kazakhstan. HILL is trying to create a vertically integrated cluster of lubricants by producing a wide range of oils meeting international quality standards. TCO’s logistics group decided to test HILL’s product on certain types of vehicles used by TCO. The test results were favorable so TCO began using domestic company HILL Corporation to supply oil for use in TCO vehicles and partially replaced foreign-made oil.
Local Content and Small Business Development
Ensuring that there are world-class suppliers of goods and services in Kazakhstan is essential to Tengizchevroil’s sustainable growth. In order to help improve availability of goods and services in Kazakhstan, Tengizchevroil and Karachaganak, another leading Kazakhstani energy producer, annually co-host forums for interested companies such as the 2012 Western Kazakhstan Investment forum on the creation of new industries in Western Kazakhstan.
Representatives of local and international equipment manufacturers, service companies, heads of international and Kazakh oil companies and state bodies discussed the mechanisms for improving the level of professionalism and skills and continued development of Kazakhstan’s goods and services suppliers to the energy business. A variety of workshops were offered to help businesses learn the standards, processes and best practices in working with large companies such as TCO. Local companies also met with international suppliers to create potential joint ventures. Joint ventures between Western and Kazakhstani companies have proved successful over the life of Tengizchevroil in helping Kazakhstani companies develop products and services that comply with international standards.
Another example of building local capabilities and creating employment is our loan program for small and medium businesses. Under this program, we provide interest-free loans to entrepreneurs which manufacture goods, or provide services for the oil and gas industry. Since the beginning of the program, TCO has invested almost $9 million in these loans, which have created about 1,400 jobs in Kazakhstan. TCO assists the businesses we support through these loans with business planning.