Region of Great Opportunities

The industry of the West-Kazakhstan Region is mainly represented by oil and gas production companies, oil service companies, oil processing and refining companies, automotive manufacturers as well as steel producers.

One of the largest operators, that explores the biggest oil and gas condensate field, Karachaganak Petroleum Operating company works in the region.

Altay Kulginov, the governor of the West Kazakhstan Region tells us about the situation in the region.

Altay Seidirovich, what role do the big oil and gas projects play in the development of the region?

Undoubtedly, large oil and gas projects has a big impact on the social and economic development of the region. Today, the basis of the West Kazakhstan Region’s economy is industrial production, which is responsible for more than 50% of the region’s gross product. On the country level, the region provides 8.6% of the total industrial production in the state.

Our region is home to Karachaganak, the largest oil and gas condensate field in the World. Since the signing of the Final Production Sharing Agreement, the shareholder companies of “Karachaganak Petroleum Operating” have invested about 21 billion US dollars in the development of the field, and brought the most innovative technology. Since then more than 13.7 billion US dollars have been paid to the state budget by the consortium. After commissioning the fourth technological line of liquid hydrocarbon stabilization at Karachaganak, about 93% of hydrocarbon is being exported in the form of crude oil, gas and condensate to the European markets through Caspian Pipeline Consortium and through “Atyrau – Samara” pipeline. In total, Karachaganak Petroleum Operating produces about 48% gas and 15% liquid hydrocarbon in the state.

Another large field in the region is the Chinarev oil and gas condensate field, that was found as deep as 4300 – 5200 meters in 1991. Its current reserves are estimated as 48.7 billion m3 of natural gas and 35 million tons of oil and condensate.

Thus, we can say that West Kazakhstan Region undoubtedly has a strong potential in the development in the sphere of hydro carbonate extraction and this positively influences the social and economic development of the region and the state.

The oil and gas industry is the key source for social and economic growth of the Western Kazakhstan Region.

While oil prices are declining, the attention to the social projects is not weakening. What social-infrastructural projects are implemented in the region jointly with large subsoil users that work here?

In 2009, the Joint Committee for Governance made a decision to double annual social infrastructure projects financing up to 20 million US dollars in the West Kazakhstan Region. Moreover, in 2014, it was decided to allocate 10 more million US dollars annually in 2014-2016 for social projects and infrastructure financing in Burlin District of the West Kazakhstan Region.

By now, Karachaganak Petroleum Operating company invested more than 300 million US dollars into the social infrastructure. Among large projects, we can point out the construction of the “Karachaganak-Oral” natural gas pipeline, which was commissioned at the end of 2011. The pipeline connects villages all the way between the Karachaganak Processing Complex in Aksai and Uralsk. Installation of the facility for stabilization and purification of raw hydrocarbons at the Karachaganak Processing Complex in 2011 can also be pointed out among the large projects of regional importance.

As for the infrastructure projects of the KPO, they include gas and water supply, heating and electricity grids, roads and street construction projects. We note that in 2016 KPO provides financing for reconstruction of Dostyk Avenue and other roads, renovation of water and sewage system of Uralsk. The “Improvement of reliability of electricity transit from HTES KPO and “West Kazakhstan REC” JSC” project has been completed.

Since the start of business in the region KPO constructed 17 school for 6300 pupils, 7 kindergartens for 1900 children, hospitals, stadiums, and a swimming pool, Ice Arena, Kazakh Drama Theater, tennis center, Wedding Hall, the Assembly House and the House of Arts named after Kadyr Mirza-ali. The buildings of Regional Philharmonics and the Russian Drama Theater named after Ostrovskiy were also renovated with the help of KPO.

New projects were started in 2015-2016, that include the construction of the Palace of Youth and Students, the renovation of the right embankment of the Chagan river in the Uralsk city park.

Advocating sustainable development, KPO continues the work on the realization of the social infrastructure projects, not only within their mandatory contractual terms but also on the voluntarily basis. In 2015 a 14-killometer long part of the “Aksai-Burlin” highway was reconstructed. Financing of reconstruction of additional 24-kilometer long part of the highway is now under negotiation with KPO.

All these measures are aimed at the achievement of sustainable development of the region and the improvement of lives of local people.

Which state bodies do you work with and how do you co-operate in the course of implementation of oil and gas projects, including the matters of increasing of local content requirements?

For the purposes of local content development, West Kazakhstan Regional akimat togehter with the Ministry of Energy, the Ministry of Investments and Development, the Ministry of National Economy and “National Agency for the development of local content “NADLoC” JSC takes part in all the important meetings, conferences and exhibitions at the regional or national level.

In 2015 under the auspices of the local content development Forum, that was organized here in Oral, with the participation of the Minister of Energy and the Minister of Investments and Development, 39 memoranda were signed between regional akimat, national companies and large natural resource and industrial companies for the total amount of 44.9 billion tenge. Following these memoranda, 385 contracts were concluded valuing 38.6 billion tenge in total.

Kanat Bosumbayev, the Minister of Energy visited our region on April 28, 2016. During his visit of Aksai industrial park, a local content development meeting took place with the participation of the competent body i.e. “PSA” LLP and large subsoil use companies, industrial associations and local producers.

The delegation of West-Kazakhstan Region’s businesses participated in “Atyrau: Oil and Gas” North-Caspian regional exhibition and “Global Atyrau Oil and Gas” Conference, which took place on April 12-14, 2016. Industrial enterprises presented their capacity at the exhibition. We managed to reach an agreement with Tengizshevroil on continuing development of cooperation with machinery manufacturers of our region.

In the result of negotiations with “Ligabue” company we had in the first quarter of 2016, we agreed to expand local food and meat supply to “Ligabue”, which is one of the main contractors to KPO.

On May 24, 2016, KPO organized an introductory seminar on the elimination of gas restrictions for local suppliers of goods, works and services. Within the seminar, KPO has presented potential amount of need in production for this project.

All meetings stated above have certain sizeable effects that promote quality changes in the region. For instance, at the end of 2015, the total share of local content in the Karachaganak project was 49% or 581 million US dollars.

What new ideas and solutions do you want to present to the region in the nearest future?

Now, within the Strategic plan of development of the Republic of Kazakhstan until 2020 and the Territorial development program, approved by the Ministry of National Economy of the Republic of Kazakhstan, we are working on the drafting of the West-Kazakhstan territory development Program until 2020. The regional program includes development plans of Uralsk and districts of the region. Public councils are actively involved in the discussion of the programs.

We have already visited the largest districts of the region and discussed important regional initiatives. In the nearest time, all wishes and recommendations received in the discussions will be analyzed and incorporated into the program document, according to which the region is to be developed.

First of all, we put the realization of the state programs as the main priority in our work. In particular, under the State Program of the industrial and innovative development of the Republic of Kazakhstan for the period of 2015-2019, the work on the development of “Machinery manufacturing for oil and gas industry” cluster will be continued. At the moment, the concept of the prospective national clusters formation until 2020, the National Cluster Development strategy and Roadmap on its realization are adopted. All these documents define the prospective vectors of the cluster development.

For the successful cluster development it is necessary to have aspiration and cooperative actions of all its participants, in particular University representatives, development institutions, engineering entities, machinery manufacturers and oil and gas companies. That is why, under the Akimat’s decree, we created a working group that includes representatives of the regional chamber of entrepreneurs, oil and gas companies (KPO, “Zhaiykmunai” LLP), management of machinery manufacturing companies and educational institutions. A road map on the development of “Machinery manufacturing for oil and gas industry” sub-cluster is being developed.

The creation and development of the National Cluster is coordinated at the level of central executive state bodies and national development institutions. The Council of the National Cluster led by the Minister of Energy has be founded to support development of the initiative on the national level.

Taking into account the geographical location of the region, development of transport and logistics capacities is of utmost current importance for the region. Now, we are designing a project for construction of Uralsk transport and logistics center. The project will be implemented with the support of private investors. It is now at the stage of state examination and feasibility study. Meanwhile, the construction and reconstruction of the roads of the city, county, regional and republican level are taking place. We are planning to renovate more than 230 km of roads by the end of the year.

One of the main directions of the region’s activity is agriculture. Taking into account that the region is remaining to be short on water, the question of the modernization of water irrigation infrastructure also remains to be topical. In this regard, we started the realization of the Kirov-Chizhinskyi canal reconstruction project. The project is designed to balance inter-basin water exchange between the Oral-Kushum system and Big Ozen river in the Kaztal district. Successful implementation of the project would enable us to irrigate 130 thousand hectares and 6.6 thousand hectares out of guaranteed estuary irrigation.

In this connection, an important factor of the agriculture development is the quality of the hydro-technical infrastructure. Renovation of the hydro-technical complex would improve the livestock production capacity, enlarge fodder production and create new jobs in rural areas.

The small and medium size enterprises take important role in our plans. Entrepreneurship is a moving force of the economy and that is why this area is also in priority.

As of 1 May 2016, the number of registered small and mid-size enterprises was 46 000 which employs 108 000 people and counts for 31% of tax contributions in the region. Comparing to the last year the number of SME grown on 3%. The share of SME in the gross regional product is 11% higher than the average national rate (37% in West Kazakhstan Region and 26% average in the Republic).

We pay high attention to the manufacturing industry. In 2016, under the Industrialization Map, we expect commission of 7 projects worth 52.4 billion tenge, which would create over 300 jobs. Besides that, 2 agriculture products manufacturing factories are under construction now and one more is planned. Once constructed, these factories will employ over 190 people and produce worth 8.5 billion tenge output.

The work on the attraction of the outside investments will be continued, as well as the work on the inter-regional cooperation within the country, for the purposes of the creation of new production and joint ventures.

All these measures would decrease the dependence of the regional gross product on the mining industry. Additionally, they create new jobs and increase tax inputs into the regional budget.

Your wishes to the “KAZSERVICE” magazine and its readers.

I wish your magazine prosperity, the growth of the number of readers, as well as interesting and actual topics. I wish success to the readers, wealth, and expansion of their network with interesting and valuable people. Of course I wish them good health.

Altai Seidirovich, thank you for the interesting and useful information, that you have shared with us. I wish you a healthy life and the realization of all goals.

Daurzhan Augambay

INFORMATIVE NOTE

West Kazakhstan region is a large agricultural and industrial region of the Republic of Kazakhstan.

The total area: 151.3 thousand square kilometer (5.6% of Kazakhstan)

Population: 636 875 people (3.6% of the population of Kazakhstan)

One of the main advantages of the region is its geographical position. The region borders with 5 Russian regions, with 1.5 thousand kilometers total border length.

The Region is rich with natural resources, the main of which are oil and natural gas. 97% of gas condensate and 44% of natural gas of Kazakhstan are produced in the region. The economy of the region is mainly based on the mining industry, the share of which is about 90% of the total value of industrial production.

In the scale of the state, the region provides around 5% of Kazakhstan GDP. The average annual growth of the is 2.4%. The per capita gross regional product is 22.9% higher than the average in the Republic.

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