Atyrau Oil & Gas
Priority on Developing Local Producers and Sustainable Partnerships
Tengizchevroil LLP (TCO) is one of the “three pillars” of Kazakhstan's oil and gas industry. It remains the country’s largest oil producer and the largest taxpayer in the national budget. Since its establishment in 1993, TCO has consistently contributed to the Republic of Kazakhstan by making direct financial payments totaling $201 billion. In 2024 alone, payments to Kazakhstan amounted to $11 billion.
At the beginning of 2025, TCO announced that it had reached a significant milestone in its Future Growth Project (FGP) by safely initiating crude oil production at its new Third-Generation Plant (3GP) at Tengiz oilfield.
As expected, FGP will expand Tengiz’s crude oil output by an additional 12 million tons per annum. Thus, once all processing facilities are operating at full capacity, TCO’s total annual crude oil production is expected to reach approximately 40 million tons. Achieving such an indicator gives Kazakhstan incremental value through taxes, royalties, and other direct financial payments. FGP will also contribute to maintaining the reliable operation of the base business and strengthening Kazakhstan’s position as a major supplier to global energy markets.
In this article, we will share TCO’s contribution to the dynamic development of the national economy.
A reliable supplier of raw materials for the domestic petrochemical industry
TCO continues to play a leading role in meeting the Republic of Kazakhstan's growing gas demand by supplying raw materials for the petrochemical industry and domestic consumer needs.
The company supplies propane for Kazakhstan Petrochemical Industries Inc. (KPI) 's new polypropylene production plant, which was launched in November 2022 in the Atyrau Region. It will also supply butane to the butadiene production plant currently being constructed.
Currently, the whole volume of dry gas available at TCO is supplied to the domestic market. At the end of 2024, TCO signed an agreement with KMG Petrochem to supply up to 9 billion cubic meters of dry gas per annum to the gas processing plant in the Atyrau Region.
Another purchase and sales agreement that ensures stable gas sales supplies to Kazakhstan's domestic market was signed with QazaqGaz, a national company.
Kazakhstani content at Tengiz
Through the FGP project, Kazakhstani companies have proven their outstanding capabilities in executing large-scale projects. During the implementation of FGP, TCO invested about $19.5 billion to purchase local goods and services and concluded over 1,250 contracts with Kazakhstani suppliers.
At peak construction, FGP created about 90,000 jobs and during the projects’ implementation. Qualified and skilled national personnel who underwent about 37,500 training courses and, thanks to the experience gained in Tengiz, can now work on large industrial projects in Kazakhstan and overseas.
Within the FGP framework, TCO supported technology transfer through partnerships with international companies and helped modernize infrastructure in Atyrau Region.
TCO has been and remains a key participant in Kazakhstan's economic development and a leading player in the development of local businesses. Since 1993, TCO has purchased goods and services worth about $50 billion from Kazakhstani suppliers.
In 2024 alone, TCO spent $2.9 billion purchasing goods, works, and services from Kazakhstani companies. These significant annual expenses are not limited to the Atyrau Region; they positively impact several regions of the country.
In 2024, the company developed a program to increase the domestic value of goods, works, and services in cooperation with the Ministry of Energy of the Republic of Kazakhstan. This initiative will form the basis for implementing Kazakhstani content plans for the next five years.
The main areas of activity, according to the program, include:
- improving the principles and mechanisms for supporting Kazakhstani Manufacturers
- providing favorable tolerances during commercial evaluations,
- having local-only bids where the market is available,
- having clear internal KC KPIs for Managers and Leaders as part of performance goals and
- relaxing financial evaluations of local suppliers.
TCO intends to cooperate directly with local suppliers and global original equipment manufacturers and will support the International Machine Building Center in expanding KC procurement capabilities. TCO also interacts with business associations and domestic companies at various workshops and conferences, providing them with information about upcoming purchases, requirements for potential business partners, and procurement strategies.
Over the past few years, TCO has organized forums associated with upcoming strategic tenders to provide local companies with information on technical and tender requirements, including commitments to business partners regarding Kazakhstani content.
New contracts with local producers
In summarizing the work with domestic producers, it is important to note that in 2024, the company entered into new agreements with over 10 domestic producers and service providers, complementing the existing contracts with more than 1,000 Kazakhstani businesses. The list of new contracts encompasses a wide variety of goods and services, ranging from the supply of maintenance materials to the production of fittings, flanges, gaskets, and fasteners.
According to TCO Deputy General Director Konilkosh Suyessinov, the overall Kazakhstani content in goods and services purchased by TCO reached 69% by the end of 2024, compared to 11% in 1993, when the Tengiz field development contract was signed.
In 2024, Tengizchevroil implemented reduced financial and technical requirements and simplified procedures in contracts with domestic suppliers to facilitate the participation of local companies in tenders and projects. For example, Kazakhstani service providers can now use guarantees issued by second-tier banks with a credit rating of at least "BBB" (S&P and Fitch) or "BAA2" (Moody's) for contracts with a total value of up to $10 million. For contracts that do not meet the new criteria, TCO will continue to apply the existing requirements for bank guarantees from second-tier banks rated at least "A".
One of the key changes in the company's policy will be the implementation of the "local tenders only" approach for a number of product categories, which will help increase the share of Kazakhstani content. TCO also uses a system of trial orders for products from local producers to allow technical evaluation of their compliance with the company's requirements. In addition, the company actively implements key performance indicators (KPIs) in long-term contracts, encouraging contractors to increase localization.
TCO actively supports Kazakhstani producers by allowing them to sell their products at a zero value-added tax (VAT) rate. This decision aims to develop local production and improve Kazakhstani companies' competitiveness. To be eligible for the zero VAT rate, the product must have a certificate of origin in the form "CT-KZ," confirming that the goods were produced in Kazakhstan.
Localization of production and certification of local companies
As part of OEM localization, TCO has significantly expanded Kazakhstani producers' capabilities. The company actively cooperates with local enterprises to create joint productions and develop technologies required to meet the high standards of the oil and gas industry. This has increased the share of domestic products in production chains and reduced dependence on imported components. Under this program, many Kazakhstani companies have been able to produce equipment and components that were previously purchased abroad.
In addition, TCO invested in the training and certification of local specialists, which helped improve the quality of products and services and increase the competitiveness of Kazakhstani companies in the international market. The development of production capacities and the attraction of advanced technologies enabled the progress of a sector producing high-quality original components. This supports the oil and gas industry and opens new prospects for Kazakhstani enterprises in other sectors.
TCO actively collaborates with the Kazakhstani IMB Center (International Center for Development of Oil and Gas Machine Building). For the period from 2021 to 2024, the Center developed 15 plans for the development of domestic producers, five of which were recommended to operators of major oil and gas projects as potential suppliers that meet key technical, quality management system requirements, occupational health and safety, and environmental protection standards.
TCO qualified 4 of these producers and placed orders with them to produce equipment such as explosion-proof boxes, process filters, gaskets, and ball valves. Additionally, in 2024, tripartite memorandums of cooperation were signed between TCO, the IMB Center, and nine manufacturing companies. The memorandum allows these companies to qualify for further consideration as potential suppliers to major oil and gas operators, including TCO.
Some production capacities were localized as part of TCO's original equipment manufacturer (OEM) localization program. These include companies that specialize in producing goods necessary for safe operations at Tengiz. In particular, these are profile and spiral-wound gaskets from Genersi, electrical equipment from Sigma Solution, electrical cables from Kazelectromash, LED lighting equipment from Prolux LED, and flanges and fittings from FAD Kazakhstan, among others.
Thus, the company is constantly seeking new opportunities to support and invest its resources in the sustainable development of suppliers to help them achieve higher production activity.