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How Chevron Invests in the Diversification of Kazakhstan❜s Economy
Vice Minister of Energy of the Republic of Kazakhstan Alibek Zhamauov and Damon Thornburg, General Manager of Finance for Chevron Eurasia Business Unit and General Director of Chevron Direct Investment Fund Ltd. (CDIF), discuss the activities of CDIF in Kazakhstan in an interview with Petroleum.
– Alibek Zhumabekovich, what role did the Ministry of Energy play in creating Chevron's Direct Investment Fund Ltd.?
– The chronology is as follows: On October 11, 2021, the Ministry of Energy of the Republic of Kazakhstan and Chevron signed a Memorandum of Understanding as part of the work on creating CDIF. Then, at the beginning of 2022, the Company announced the launch of the website www.cdif.kz, aimed at raising awareness among the Kazakhstani business community about the Fund, ensuring transparency in the application process for financing, and identifying and selecting investment projects.
The website, in particular, allows potential applicants to submit funding applications and provide necessary project documentation from anywhere in the country online.
My colleagues from the Ministry have been actively involved in the creation of CDIF throughout this time. I am proud that the joint efforts of the Ministry and Chevron have taken shape in the form of an operational Chevron Direct Investment Fund Ltd. mechanism. Taking this opportunity, I want to express my gratitude to the employees of the Legal Department, the Strategic Development Department, the Subsoil Use Department, the Oil Development and Production Department, and colleagues from Chevron. Together, we are doing important work that will undoubtedly positively impact Kazakhstan's economy and its citizens.
– Does the Ministry currently participate in the Fund's ongoing activities?
– I would say this: our Ministry has a strategic role implemented through participation in the Fund's Advisory Board. We review investment projects provided by Chevron, focusing on recommendations for selecting projects or industries from the economy's short-term and long-term development perspective. This support benefits not only Chevron's Fund but also the business community because if an investment project does not receive approval from the Advisory Board, we provide a rationale that the applicant can use to improve their business.
This comprehensive approach will positively impact Kazakhstan's economy by creating jobs, increasing contributions to the national budget, and developing new economic sectors.
– Mr. Thornburg, Chevron has been operating in Kazakhstan since 1993. In addition to producing hydrocarbons at Tengiz, the company has a Polyethylene Pipe Plant in Atyrau and now Chevron Direct Investment Fund Ltd. What goals did the company pursue in developing its business in this direction?
You are correct; Chevron has invested in Kazakhstan's economy for thirty years. We are proud of our fruitful partnership with Kazakhstan, as over these thirty years, our cooperation has contributed to the country's economic development, job creation, and support of social initiatives.
The study conducted by S&P Global, internationally recognized institution in collaboration with KIMEP University, demonstrates the effects of Chevron’s contributions from social investment programs over a period between 2010-2021. Out of every $100 in net production revenue, more than $61.8 is pumped directly back into the Kazakhstan economy, fueling additional growth. Chevron helped deliver 6.1% of Kazakhstan’s total annual economic output over the last twelve years.
The concept of Chevron's Direct Investment Fund Ltd. originated in 2021 as a result of seeking for an effective way to invest into Kazakhstan's economy. Conceptually, the fund's idea is simple, but there were many factors requiring detailed elaboration to bring it to reality. Extensive joint work was carried out with the Ministry to establish and work out operational mechanism of CDIF. In 2022, we officially launched CDIF and began accepting applications through our website.
As one of the largest investors, we undertook an experiment in Kazakhstan, which was successful. Over the past two years, the fund's model and well-thought-out transparent process have proven their practicality. In just the first two years, we have advanced and managed to invest up to $41 mln in Kazakhstani companies, and I am very pleased with this fruitful process.
– Does Chevron have similar experience in other countries?
– This is Chevron's first global experience using a direct investment fund as an investment tool. The company has experience investing in other private funds, but the creation of CDIF is a unique experience for Kazakhstan and other countries where Chevron operates. We are working closely with the government of the Republic of Kazakhstan on this project. It is an exciting process because we did not have a model to follow—there is no similar fund in other countries—so we are developing our own experience.
– Mr. Thornburg, given your international experience in finance, how do you assess the Kazakhstani market from this perspective?
– I have had the opportunity to live and work in many countries around the world. I would like to note that the field of direct investments in Kazakhstan is developing very actively. My team and I are pleasantly surprised by the quality of the projects we receive. Overall, we are very optimistic about the prospects of Chevron's Fund in Kazakhstan.
For more details on the criteria for selecting Kazakhstani companies for investment, the application process, and the review mechanism, as well as the first successful examples of cooperation with Kazakhstani companies, you can read the April issue of Petroleum Journal (No. 2-2024) and on the website www.petroleumjournal.kz and the Fund's website www.cdif.kz.