Partnering with Oil Companies: New Opportunities to Do Business
Advantages to be gained from participating in international projectsKazakhstani companies can become suppliers for major companies working in the oil and gas sector, providing extensive opportunities for growth and allowing them to gain important experience in participating in large international projects. An excellent example is the collaboration between the company Tesla-Tan and Tengizchevroil (TCO).
Tesla-Tan, which is 100% Kazakh-owned, was established in 2007 and has since worked mainly in the oil and gas sector and mining and metallurgical sector. From the initial engagement, they have offered a wide array of services covering the full range of construction and installation needs: project design, industrial construction, electrical installation, start-up operations and instrumentation systems.
«Our journey began in Karabatan, where we were subcontractors in the construction of the Bolashak oil refinery, with a staff of 20 people. For the next 4 years of the project, we worked as a subcontractor with Bateman, Bonatti SpA, GATE until in 2012 our company signed a direct contract with Agip (AKCO). By that point, the company had grown to 600 employees», - said Alisher Valikhanov, the CEO of Tesla-Tan.
Later we participated in other major projects. In 2013-2014, the Tesla-Tan team worked with KazStroyService (KCC) on the expansion of the Atyrau Oil Refinery (ANPZ). At the same time, the company was also expanding into new industries by taking part in a mining project, completing electrical work at the Bozshakol Mining Complex in 2015 and the Aktogay Mining Complex in 2016 (along with Kazminerals Projects BV (KPBV)), where it currently continues to work on a project to expand the complex.
In 2015, the company completed TCO’s prequalification procedures, and in the summer of 2016 Tesla-Tan signed its first two contracts with TCO (Base Business).
«For us, 2018 marked a new stage in our company’s growth, as we began our participation in the Future Growth Project (FGP), receiving a number of subcontracting projects from general contractors, as well as a direct contract with TCO. I think it would be appropriate to say here that participating in the FGP has allowed us, to some extent, to enter a new stage in our company’s development as we’ve transitioned to a new level. Up until 2017 we were a company with 2-3 units of special equipment on our balance sheet, but starting in 2018, thanks to our participation in FGP, we were able to significantly grow our fleet of specialized vehicles and equipment. Now the company has about 100 units of custom machinery and more than 80 units of lab equipment. Our workforce has grown to 800 people. Recently we received our licence for a gauge inspection laboratory», - noted Valikhanov.
He went on to point out that there were no difficulties in working together with TCO, since by the time they were prequalified, Tesla-Tan had operated in the market for 7 years. During this time, they had gained the necessary experience, obtained the documents they needed, and their staff had gained qualified specialists.
«We received our construction licence, health and safety management system certificate, quality management system certificate, and accreditation for our laboratory. These are merely the basic documents required. Observing the long list of requirements, many may think that the process must be deliberately complicated,” said Valikhanov. “But it’s important to understand that if a company wants to become a business partner of TCO, these are the documents which will be required. It’s a way to confirm that your company is reliable, and the same basic requirements are set by many customers of goods or services both in Kazakhstan and abroad».
For a number of years TCO has relied on cooperation with Kazakhstani companies, who supply an array of goods and services. This is of course a plus for the development of the regional economy: the creation of new industries and the expansion of existing ones, the creation of new jobs, an increase in tax revenues, investment in social infrastructure. According to publicly-available sources, since 1993, TCO has purchased $37.3 billion of Kazakhstani goods and services. In the first quarter of this year alone, contracts have been signed valued at more than $778 million. As new technologies develop, there has also been an increase in the kinds of services that can be purchased. The digitalization of the industry, for example, has created new opportunities for domestic tech companies. Those who intend to do business with TCO can find a list of goods and services which it requires on the company's website. The published plan for 2021 includes TCO's projected needs. Updates are made to the document as necessary, and these changes are promptly reflected on the site.
When working with potential suppliers, TCO pays significant attention to commercial, financial, logistic and technical aspects. The company regularly conducts training courses for its suppliers, explaining important aspects of the legislation on subsoil use. The Supplier Development Program launched by the European Bank for Reconstruction and Development (EBRD) was funded by TCO. Reviews of the program showed that in 2019, 73% of companies participating increased their revenues by 66%, and their number of employees increased by 32%. Working with TCO has allowed new production facilities to open in regions throughout Kazakhstan.
The US company Baker Hughes, for example, partnered with the local company Topan to launch the production of eleven chemical substances in West Kazakhstan, and the company Edil-Oral.kz opened a service center for repairing electric motors.
Overall, the oil and gas industry has created additional opportunities for local small and medium-sized businesses. According to Kazakhstan’s Ministry of Energy, in 2019 the total volume of goods and services purchased by the oil industry reached an all-time high of 7 trillion 34 billion tenge. Local purchases accounted for 44.6%, and 82% of all purchases came from TCO, the North Caspian Operating Company (NCOC) and Karachaganak Petroleum Operating (KPO). In 2020, the creation of an International Center for the Development of Oil and Gas Engineering was proposed. The agreement to establish the center in November of last year was signed by representatives from the Ministry of Energy, the Ministry of Industry and Infrastructure Development, the Union of Machine Builders of Kazakhstan, as well as the heads of the companies PSA, KPO, TCO, and NCOC. The main goal of the project is to localize the production of goods for the oil and gas industry. The center will be financed by the operators of these three oil and gas projects, with the center itself operating on a non-profit basis. This is one more way for companies to take part in major oil and gas projects.
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