How to solve issues of local content in Kazakhstan
The issue of increasing the share of Kazakhstani content in the procurement of goods, works, and services of oil and gas companies remain relevant. When selecting suppliers, subsoil users continue to give preference to foreign manufacturers.
Petrocouncil.kz presented for publication the results of a study conducted by a Bolashak scholar, a graduate of the University of Warwick in the United Kingdom, Zhanagul Nakpayeva. The work was carried out at the time she was writing a dissertation on "The ability of local content requirements to develop local supply chains in the oilfield services sector of Kazakhstan."
The aim of the dissertation was to identify whether local content requirements can stimulate the growth of local manufacturing companies (namely machine-building companies) in the oilfield services sector and build effective local supply chains for the long-term industrial development of Kazakhstan. The work includes a collection of literature and research, which was conducted in the form of interviews with representatives of the oil and gas and other industry sectors to identify problems of local suppliers, as well as to assess the effectiveness of local content requirements in Kazakhstan. The recommendations are based on successful examples of local content in other countries and their best strategies for industrialization.
In summary, the results of the study showed that, despite the presence of many strict requirements for local content, the development of local production companies of oil and gas machine building and local suppliers has limited success.
The main reasons are a decentralized approach aimed at increasing the share of local content in oil operations, regardless of the competitiveness of local suppliers, a lack of coordination among industry stakeholders, and a weak focus on the long-term development of local supply chains and manufacturing enterprises.
The study identified several issues for local manufacturing firms. In particular, this is the lack of local production of oil and gas equipment according to international API and ASME standards, the lack of modern technologies, machines and equipment for production, inefficient and outdated workflows, and the import of raw materials for the production of oil and gas equipment.