​"As for oil prices, there is still a safety margin"

By Saule Tasboulatova

Pipelines major repair activities at Kashagan project are ongoing ahead of schedule. Production re-start is expected tentatively at the end of next year.

“KAZAKH CONTENT IS COST-EFFICIENT"

This was announced by Zhakyp Marabaev (on photo), the deputy managing director of the North Caspian project operator –NCOC N.V during issuing of ISO international certificates.

– You all know the reason why we couldn't start the production – we had a problem with pipeline. This pipeline is now under reconstruction and activities are carried out ahead of schedule. Upon completion of preparation of all our technological facilities, we indent to resume production at the end of next year, – he said.

International standard certificates were handed to 16 Kazakhstan companies that went through the training and certification at the expense of NCOC N.V. Their availability provides the chance to take part in tenders announced by international companies, including in future in the North Caspian Sea projects.

Regarding the development opportunities for the local companies Zh. Marabaev told the following:

– Currently we don't perform a lot of construction activities, because all construction is basically finished. There are some punch list items and repair works left, as well as preparation of facilities, their examination and diagnostics. Therefore, upon general approval, we are soon planning to start development of the Kalamkas project that is also a potential project both for Mangistau and Atyrau oblasts. We also very much hope to increase production at the operating units and in this regard to construct gas re-injection facilities. A lot of work is expected at commissioning of drilling islands EPC-2, 3, 4, installation of on-shore equipment is also a good opportunity.

After the official part of the ceremony we asked Marabaev a few questions.

– How many Kazakhstan companies participate in North Caspian project?

– Figures may vary, but let me tell you that over the last 10 years more than 1 100 companies participated in our program for improvement of local suppliers. We are increasing Kazakh content not because they are talking about it everywhere, but for one simple reason – the maximum attraction of Kazakhstan contents leads to considerable economy. We don't need to bring experts from overseas, arrange their accommodation issues, etc. Therefore, you may rest assured: if you are qualified to meet our needs in deliveries of services and goods, then we have nothing but to work with you, because it is profitable to us, from the business point of view.

– Can you tell us the figures in percentage ratio?

–If to speak in terms of money - more than 11 billion dollars worth of work has been done by the local companies in the last 9 years. This is a very large sum for the project of such scale. Believe me, I am local just like you – I am from Atyrau. In this project almost all technologies and everything that is done is done for the first time. And by doing so, we manage to attract local content for such a big amount of money. This is a big achievement and not many understand that is very complex to achieve.

– And what projects they are involved in?

– Practically on all. Starting from design engineering, servicing, repair works – everything that covers oil industry (as we were told at NCOC N.V -Ersai company that has relation to pipeline, is also among the companies with local content. – S. T.).

"KASHAGAN CAN'T BE UNPROMISING"

– Do we have companies that can compete with the western ones?

– There are companies and there are persons. We shouldn't forget about nationalization of personnel. I can name a few employees who worked in our company then left for private businesses and currently are managing local companies and successfully providing services to us today. I can also give you an example of how we developed one national local company, that later, after improvement was bought by one of the transcontinental companies. Now it is not Kazakh any more, but became international and provides services not only in Kazakhstan, but also abroad. There is another problem that we are going to face. When we will be included into WTO, there will be no preferences any more that we arrange for Kazakhstan companies today. It means, that we need to make Kazakhstan business a competitive one. What is happening today – it is a natural evolutionary process. We need to learn, to get certified and be competitive. People are already ready for that and live with it.

– Against the background of low oil prices what are the prospects for the North Caspian project?

– The prospects are good. There are big speculations going on. They say that with falling oil prices to a certain level the project will become unprofitable. But it is necessary to understand that money has been already invested here, and at any price the foreign investors should at least return their money, whatever the price will be. I assume that we are not at the price that we need to worry about. We still have the margin of safety. We are talking about the gigantic field, the field with big reservoir pressure, and it means that it will be a free-flow production. I think, we will have very good “cash" flows. Money will be returned fully and even with a certain interest.

– What is the prime cost of Kashagan oil?

– It can be different at various scenarios, but let me repeat that we have a large safety factor compared to today's price.

Zh. Marabaev didn't comment on the resignation of the Managing director of NCOC N.V Stephane de Mahieu.