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TCO’s Best Friends

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On December 14, TCO held a forum on Partners’ program for development of small and medium businesses.


To recall, the purpose of the program developed by the Ministry of Economic Development and Oblast Akimat with the support of local branch of Atameken Union, National Economic Chamber of Kazakhstan,and Damu business support fund – to develop a network of local suppliers for major companies. The stake is placed on development of businesses that are not connected with core activities of “whales”.

It is not difficult to guess that having a contract with such company as TCO or Agip KCO is the dream of every businessman from Atyrau. After all, it is a guaranteed work scope and stable income. But despite the optimistic statements made at the forum by TCO managers about Kazakhstan content development, to get into the list of lucky ones is still very difficult.

According to the poll carried out among local businessmen – the forum participants, all of them, 100 %, are interested in participation of tenders announced by TCO. 30 % of them get the information about future tenders on company website and 10 % learn from mass-media. The rest 60 %, according to Larissa Dzhumagalieva, the Head of the Oblast Department of Business and Industry, don't know anything about the announced tenders. The poll demonstrated that the majority of businessmen haven’t heard that TCO gives loans for development of small and medium businesses since 1997 ($1mln a year) and aren't familiar with TCO requirements to potential suppliers.



According to Marat Dauletyarov, TCO department manager on local content development, the company reviews business plans provided by businessmen and at credit council the decisions are made on interest-free loans to local businesses. The partner of the program is BTA Bank.

During the forum TCO’s joint work with the Union of machine engineers of Kazakhstan was taken as an example of positive experience. In 2011 the list was compiled containing 230 descriptions of machine-building items required for the Future Growth Project in Tengiz.

22 Kazakhstan factories have been identified which are capable of producing the required items: 11 of them have already received the orders, 2 factories require insignificant upgrade, the rest need to change their specifications and import the technologies.

According to TCO reps, piping products, heat exchangers, block valves, compressors, gas turbines, pumps and many others are the potential directions for development in RoK.  

Dauletyarov provided good grounds for high requirements of ТШО to contractors: firstly, low quality goods and services directly impact the safety of personnel. Secondly, high “threshold” helps the local companies to develop and reach international levels. In order to demonstrate the importance of high quality of any components, he described the consequences of a hypothetical short-term plant shutdown due to malfunction of one of the assemblies:

We don't produce our product, the rail and sea transportation systems and terminals are idle, and everybody incur losses.

Such scrupulousness, of course, sounds impressive. But quite inadvertently you start recollecting the failures which became frequent in the last years at SGP due to construction defects made by contractors (and “overlooked” by the Client). At the construction stage there were many talks about doubtful quality equipment imported from overseas. The situation has not been rectified even during the latest overhaul, and to this day emergency shutdowns take place.


In conclusion Dauletyarov stated that the main objective of TCO is “effective and safe operation of assets and achievement of maximum profit for the benefit of project partners.”

There is a suspicion that on “operation of assets” of the company earn not only partners (by the way, the information how much money the Kazakh party earns from Tengiz oil to this day remains a secret behind seven seals). Businessmen informally (nobody wants to have bad relations with TCO) complain about the absence of information, the closed assessment of projects without explanation of any reasons for rejection. “Ak Zhaik” on a regular basis receives letters (mostly anonymous) about corruption among the Kazakh and foreign managers who are responsible for tender procedures. They indicate the specific names. They write about regular meetings in elite (closed) saunas, bars and restaurants of Atyrau and Almaty where confidential documents are handed over and considerable sums of money in hard currency circulate.

The last such letter reads about clear cut and smoothly running scheme of costs overestimation of completed scopes (by the way, of poor quality) and kickbacks: “TCO, thus, incurs unjustified expenses and loses profit, and Kazakhstan – the presumed royalties. How is it possible that a small firm with a very weak plant and machinery and, practically, without state-of-art equipment provides services to TCO under the pretext of advanced western technologies? After the tender “award” it becomes clear that the firm is behind the schedule they submitted and costs increase, but nobody bears responsibility for that."

The topic of tender participants selection was touched by Dauletyarov at the end of the meeting, who literally said the following:

- On annual basis we submit procurement plan for the forthcoming year to the RoK Ministry of Oil and Gas, and they publish it on their website. Concerning tenders - we register only the companies, capable of meeting our conditions. And in mass-media we announce only large tenders when we want to attract more people. And then, all the same, there is a selection process of the best companies that participate in tenders. Our goal aimed at development of Kazakh Content is not to wait for future tenders, but start working now with businessmen, so that they are ready when the time comes. We have a database and on annual basis we add new vendors. Employees, who hold tenders, select the appropriate companies in the database and attract them to work. But here we also have a selection process. We are all normal people and we all have school friends, student mates or fellow workers. You don't maintain relationships with all your 25 schoolmates to this day, we have one or two with whom you normally keep in touch. The same thing here: it is a natural selection when we select the best.


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December 20 2012, 15:25

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