KPJV foreign labour work permits withdrawal, repartition of spheres of influence in oil industry and other issues

By Laura Suleimenova

Interesting developments take place recently around Tengizchevroil's Future Growth Project. Ak Zhaik newspaper learnt about disagreements that arose between Akimat (Governor's office) of Atyrau Oblast and two foreign shareholders of KPJV design company, and one of its domestic shareholders has been sold by the state to the private company.

CONFLICT WAS SETTLED QUICKLY

The cause of the conflict between the regional government office and foreign shareholders of KPJV Ltd. (joint venture of “Kazakhstan Institute of Oil and Gas" JSC (further - KING), Kazgiproneftetrans Engineering Company LLP and the alliance of foreign companies - Worley Parsons Limited and Fluor Limited), according to our sources, was the violation of special conditions during issuing permits for attraction of foreign labor. And in particular, of the item about creation of additional work places for citizens of Kazakhstan.

According to the sources, on June 30, the representatives of Worley Parsons Limited and Fluor Limited met with the first deputy of the region Gumar Duysembayev. They were told that the government office is planning to withdraw all work permits issued to foreign experts and ensure that they left the country within one month. And all because Fluor was supposed to employ 75 Kazakhstan workers and Worley Parsons Limited - 158, so that they can satisfy special conditions of already received permits. But both companies failed to do so.

- Everything started so resolutely, but it ended with nothing. Though these foreign companies violated special requirements for obtaining permits. They have to employ a certain number of local employees, but they didn't do it. Akimat threatened them, but then someone pushed "right levers", and everything calmed down, - stated our sources.

To recall, within the framework of realization of FGP one more engineering company with similar name - Kazakh Projects Joint Venture Limited (PJV), where there are only two shareholders - the same Fluor and Worley Parsons with equal shares have been created.

We sent an inquiry to the regional administration of employment and social programs coordination regarding the possible recall of expats, but received no reply. As it became known to our editorial office, the owner of another domestic shareholder of KPJV Ltd - KING JSC, was replaced. The latter from last year was in the list of realized assets within the Program of privatization of KazMunayGas group of companies' assets.

Deputy CEO for business development of KING N.B Ekzhanov reported in his reply to “Ak Zhaik" request that the organizer of auction for selling of KING's 100% equity stake was KMG.

"IN TWO YEARS' TIME EVERYTHING WILL BE DECIDED BY NEW OWNER"

In their turn KMG's press service sent us the following answer: "KMG within the framework of implementation of "Comprehensive plan for privatization in 2014-2016" approved by #280 RoK government resolution dated 31.03.14, carries out activities on realization of assets that are subject to privatization. So, on June 29, 2015 on web portal of the register of state property of the RoK Ministry of Finance an electronic (on-line) tender has been held for realization of 100% equity stake of KING JSC and its subsidiaries. Following the results of tender the winner was SAES SREDAZENERGOSTROY LLP.

During tender announcement KMG designated a number of mandatory conditions for the buyer. Those conditions included: 1. Preservation of KING activity profile during 2 years from the date of Asset purchase and sale contract signing; 2. Implementation of obligations under existing long-term and short-term contracts for rendering of services; 3. Not reduction of current number of KING personnel during 2 years from the date of Asset purchase and sale contract signing; 4. Not decreasing the current level of salaries of KING employees during 2 years from the date of Asset purchase and sale contract signing; 5. Receiving by the buyer of necessary approvals from the RoK antimonopoly agency.

Thus, SAES, being the winner of electronic tender, accepts the responsibility for the above specified conditions. At the same time the future activity of KING, including FGP, will be defined by the new owner independently".

KAN'S PROJECTS

There is practically no information both about SAES SREDAZENERGOSTROY LLP and its owners in Internet.

The only thing that was possible to find, was the information posted on website of RoK Government procurements that SAES SREDAZENERGOSTROY LLP that is based in Almaty, was recognized as the winner of tender for the lot "Activities for Construction of "Energy Research Center" of the International Specialized EXPO-2017 Exhibition in Astana" (the contract was signed on 27.04.2015). The cost of the contract is impressive: 19 billion tenge!

Informally the businessman Sergey KAN is called the owner of SAES SREDAZENERGOSTROY LLP. According to Forbes magazine he is in the list of 50 richest businessmen of Kazakhstan with a fortune of $304 million. The circle of businessman's interests are power engineering, finance and chemical industry.

"SK "Kazakhmys" where Sergey Kan owns 25%, following the results of 2014 took the second place in the country on gains of insurance premiums volumes - $55 million. Fitch Ratings in December assigned to the company the score of financial stability on international scale of B + level. Sergey Kan is the partner of Alexander Klebanov and Erkyn Amirkhanov in TsATEK JSC where he owns 31% of shares. He is also the owner of 33% in TsATEK Investment Group LLP and 26% in KGNT Holding LLP. He is the board member of Circle Maritime Invest JSC. Caspian Offshore Construction LLP that is the part of Circle Maritime Invest, operates fleet of 45 specialized vessels, including 21 vessels that it owns. Revenue for 2013 made $130,5 million, the company shows steady growth since 2005", - reads the information from Forbes.

"IT IS BETTER WHEN OUR BOYS ARE THE OWNERS"

It is interesting that the second Kazakhstan shareholder of KPJV Ltd. - Kazgiproneftetrans Engineering Company LLP - appears in the lists of affiliated companies of KGNT Holding LLP, whose co-owner among others is Kan. In particular, from bonds issue circular of KGNT Holding that is available in open access for 2009 it follows that Kazgiproneftetrans was affiliated via Vitaliy Kolomeets, the chairman of the board of engineering company and the citizen of the Russian Federation. At that time he owned 33% of KGNT Holding.

From here, most likely, it follows that by acquiring KING the Kazakhstan business wishes to strengthen its positions in major oil projects in Kazakhstan - Tengiz and Karachaganak.

- Let our boys be the owners. The work will also be mostly given to other local companies, - noted one of my interlocutors, the head of service company.

However, there is also another opinion: current events are the indicator of the fact that in oil and gas industry of Kazakhstan the repartition of spheres of influence between various financial and industrial groups is taking place.