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To increase the volume of purchases of goods, production of which was aligned in previous

Increment in production of oil equipment at the plants of the RK by 2015 in comparison with 2010 by 23% or from 28.5 billion tenge to 35 billion tenge. 1.

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To increase the volume of purchases of goods, production of which was aligned in previous

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  1. Increment in production of oil equipment at the plants of the RK by 2015 in comparison with 2010 by 23% or from 28.5 billion tenge to 35 billion tenge 1 Increase of the share of Kazakhstan’s content in purchases of the KMG Group on commodities to 50 % or increase by 1.6 from 242 billion tenge to 387 billion tenge Increase of the share of Kazakhstan’s content in purchases of the KMG Group on work to 90 % or increase by 1.3 from 565 billion tenge to 74 billion tenge 2 Increase of the share of Kazakhstan’s content in purchases of operators of large oil and gas projects 3 5 4 Establishment of new joint production, service and machinery building assets of the KMG Main goals and objectives of the Program. To increase Kazakhstan’s content in implementing large oil and gas projects To assist domestic commodity producers in setting up production ofnew types of commodities which are currently imported. To increase the volume of purchases of goods, production of which was aligned in previous years and which are now manufactured in serial production. To set up service and machinery-building assets Expected results from the implementation of the Program Program of the NC KazMunaiGaz JSC for the Development of Kazakhstan’s Content for 2011-2015 was approved on April 22, 2011.

  2. List of individual Kazakhstan’s companies engaged in the Program of the NC KazMunaiGaz JSC (total of 52)

  3. “Service Center KazTurboRemont” LLP Examples of support of oil and gas machinery building in Kazakhstan NC KazMunaiGaz JSC is actively participating in the establishment of Kazakhstan’s plants: • Co-financing of the plant through issue of warrants (3 million USD) • Provision of long-term orders for complete overhaul, servicing and troubleshooting

  4. “West Kazakhstan Machinery Building Company” JSC Examples of support of oil and gas machinery building in Kazakhstan NC KazMunaiGaz JSC is actively participating in the establishment of Kazakhstan’s plants: • Co-financing of the plant through issue of warrants (3 million USD) • Provision of long-term orders for complete overhaul, servicing and troubleshooting

  5. List of long-term agreements concluded between the Group of NC KazMunaiGaz JSC and domestic commodity producers in 2010

  6. Long-term agreements planned to be concluded for 2011-2015 with domestic commodity producers (53,6 billion tenge) millions in tenge • KazTransOil JSC has submitted the long-term procurement plan for 2011-2014 which has been approved by the decision of the Management of NC KazMunaiGaz JSC. Currently, long-term agreements with domestic commodity producers are to be signed. • “KazMunaiGaz EP” JSC – currently, a production plan is under way for 2011-2015 and after it is approved a long term procurement plan will be signed and submitted to the Management of the NC KazMunaiGaz JSC and the Company. Further in July-August of this year open tenders will be declared among domestic producers with long-term agreements signed for 2012-2015 • KazTransGaz Group – long-term purchase plan is planned to be submitted to the Management of the NC KMG JSC in July 2011.

  7. Kazakhstan’s content in procurement of KazMunayGaz JSC • Kazakhstan’s content in procurement of KMG Group in 2010, plan for 2011 and fact for first half of 2011 Note: volume of commodity procurement includes purchase of Russian oil to be processed at the “Pavlodar Petrochemical Plant” JSC

  8. Kazakhstan’s content in purchases of the NC KazMunaiGaz JSC According to the purchase plans for 2011, it is being planned to purchase goods, work and services in a full amount of 1,455 billion tenge, whereas it is being planned to reach the 55% index of Kazakhstan’s content from the total volume. In the first half of 2011 the KMG Group purchased goods, work and services for 1,214 billion tenge with Kazakhstan’s content amounting to 48%. The volume of goods purchased amounts to 725 billion tenge with Kazakhstan’s content in commodities amounting to 40 %. Purchased work amounts to 189 billion tenge – Kazakhstan’s content in work comprises 66%. The volume of services purchased amounts to 300 billion tenge with Kazakhstan’s content in services amounting to 57%. It is noteworthy that purchases of Russian oil to be processed at the “Pavlodar Petrochemical Plant” JSC constitute a significant portion of the volume of goods purchased, which significantly forces down the index of Kazakhstan’s content in purchases of the KMG Group. In 2011 – contracts for purchase of Russian oil have been signed for the amount of 334 billion tenge.

  9. Challenging issues of Kazakhstan’s content and ways of solving them Challenge Suppliers of oil, gas, gas condensate, electricity, water and other types of commodities obtained from the subsoil of Kazakhstan or produced within Kazakhstan do not have CT-KZ certificates and thus Kazakhstan’s content for the product supplied by them amounts to zero. Notably, these types of commodities occupy a significant place within the structure of procurement of the KMG Group. If domestic suppliers of these types of commodities submitted CT-KZ certificates, Kazakhstan’s content in purchases of the KMG Group would increase from 51 to 6 % based on the results of 2010 . Ways of solutions It is necessary to revisit the existing methods and introduce necessary changes based on which those types of commodities obtained from the subsoil of Kazakhstan or produced within Kazakhstan shall be considered 100 % domestic (Kazakhstan’s) even in the absence of CT-KZ certificates; moreover, commodities with a sufficient degree of refinement shall also be considered as domestic. Relevant proposals have been submitted to the MINT of the RK and currently a new methodology of calculation of Kazakhstan’s content is being developed in light of these proposals.

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