Maintain the momentum. Kazakhstan's engineering is exported to Russia
Kazakhstan engineering companies have unique competencies, but they are prevented from exporting, including by the lack of working capital.
Currently, oil and gas industry is experiencing a significant increase in the volume of oilfield services. For example, oil and gas companies in Kazakhstan increased the volume of purchases of goods, works and services up to $18.4 billion, by 15% in 2019. About 80% of this amount is accounted for by three major companies - Tengizchevroil LLP, Karachaganak Petroleum Operating and North Caspian Operating Company. At the same time, priority is given to purchases with Kazakhstan content.
This motivates Kazakhstan entrepreneurs to create new companies in this sector, as well as to develop research, consulting, construction and other engineering competencies. Currently, about 80% of Kazakhstan companies are involved in the oil and gas industry, while the remaining 20% are joint ventures with foreign participation.
However, Kazakhstan companies continue to struggle for their piece of pie even within the country. So, according to the Association of oil service companies of Kazakhstan, more than half of the total amount of purchases was acquired by foreign suppliers last year. Figures are even lower in the field of design and engineering: Kazakhstan companies accept only 9% of the total volume of orders in this market, which was estimated at KZT 389 billion last year. British companies are leading in this segment so far.
The point is that we have developed specific competencies and previous experience, which sometimes are not enough for Kazakhstan suppliers. Therefore, successfully completed cases are extremely necessary for local companies to receive the following orders. It is even more important to support those companies that already have such experience and can export.
At the same time, domestic companies are also trusted with projects by leading companies in their industries: such as Kazakhstan's Tengizchevroil, NCOC, Russian Velesstroy LLC and others. Working with such companies under their standards is already an indicator of the qualification and knowledge level of Kazakhstan contractors, which makes them quite competitive.
Domestic engineering companies, having gained experience in the largest oil production projects in Kazakhstan, show that they can successfully export their services.
Striking example can be the company Infra Del Projects Kazakhstan LLP (IDP), which recently received an order in Russia – from the Amur gas processing plant. Company mobilized more than 300 highly qualified specialists in order to implement the first project stage at the site of Amur gas processing plant. All of them are citizens of Kazakhstan.
Previously, IDP had no experience in exporting engineering services. In this situation, support through "KazakhExport" Export Insurance Company JSC (subsidiary of Baiterek NMH JSC, a subordinate organization of the Ministry of Trade and Integration of the Republic of Kazakhstan) was important to gain such experience.
"Resources and capabilities that we have are relevant for projects in all regions of the CIS, as well as beyond its borders. We were able to successfully demonstrate to our clients in Russia that the skills and experience of our specialists, quality of equipment and tools used in Kazakhstan meet all international standards. In addition, we were able to provide competitive prices that interested Russian customers thanks to the high performance", says Gulnara Aktayeva, financial analyst at Infra Del Projects Kazakhstan LLP (IDP). - KazakhExport considered the resources and capabilities of our company and decided to provide insurance coverage for a loan to Bank RBK JSC for replenishment of working capital in order to further perform work on construction project of the Amur gas processing plant".
With borrowed funds in the amount of KZT 650 million, IDP was able to purchase all necessary consumables, as well as cover all operating expenses related to the contract execution.
By mid-2021, IDP has plans to participate in new projects in the Amur region and other regions of Russia. Negotiations with potential clients are already underway.
For Kazakhstan exporters, the probability of getting more export contracts, already having positive results of cooperation with foreign companies, is quite high. Therefore, government assistance in such transactions has a multiplier effect.
