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 KAZAKHSTAN International Business Magazine №4, 2004
 For the Benefit of the Region and the Country
For the Benefit of the Region and the Country
The international consortium, Karachaganak Petroleum Operating B.V. (KPO), operating the gigantic Karachaganak oil and gas condensate fieldt has entered world markets. The delivery of stabilised gas condensate and light oil produced at the field through the CPC pipeline system to global consumers began in spring of 2004. This became probably the most important event for KPO for the current year, and marked a transition to the next stage in the Karachaganak project development.
To Produce and Export!
The launching of a number of facilities, including a unit for gas re-injection to the Unit-2 collector for increasing reservoir pressure, a pre-export hydrocarbons processing complex, and the 635-km long Karachaganak – Bolshoy Chagan – Atyrau export pipeline, which connects the field with the CPC contributed to the launch of exportation of Karachaganak unrefined products. All of these will provide an opportunity for the consortium to increase annual hydrocarbons output up to 10-10.5 million tonnes, and gas up to 10-13 billion cubic meters (in 2003 condensate output at Karachaganak totaled 5.73 million tonnes, gas output amounted to 5.51 billion cubic meters).
Not only CPC shareholders, but also consumers were looking forward to the unrefined products from Karachaganak. And at last, they began to arrive at the Tengiz – Novorossiysk pipeline on May 16, 2004, and the first tanker loaded with Karachaganak oil owned by ENI-Agip departed from the Yuzhnaya Ozereyka terminal near Novorossiysk on the night of June 10. At first it was planned to ship up to 100,000 tonnes of stabilised condensate per month through the system. During the third quarter of 2004, however this volume totaled 550,000 tonnes, and will later reach an annual level of 7 million tonnes. Thus, this allowed the consortium to become the second largest CPC supplier in Kazakhstan following TengizChevroil. As a result, the capacity of Tengiz – Novorissiysk pipeline, through which 14.8 million tonnes of Kazakhstani oil was pumped in 2003 alone, will be increased up to 21.7 million tonnes.
Along with operational activities, KPO also implements a number of projects related to ecological safety and labour protection. In particular, the hydrogen sulphide detection systems at gas preparation facilities have passed independent technical and ecological analysis, and are capable of registering the presence of hydrogen sulphide in any concentration exceeding a level of zero. All devices are subject to technical calibration in compliance with Kazakhstani and international metrological standards. The air safety around the working zone is guaranteed through regular monitoring of the atmosphere around the gas preparation units. In addition, jointly with healthcare and safety standards experts from all over Kazakhstan, KPO participates in a long-term national interdepartmental study on the levels of activation of gas-analyzers applied at units with high-sulphur containing gas production.
The Role of Personnel Is Decisive!
KPO management pins its operational successes primarily on its highly qualified labour resources. The foreign shareholders, certain of the fact that the nationalisation of personnel will contribute to effective management at Karachaganak support a Kazakhstani personnel-training programme to obtain skills in international management. At the present time, the number of local employees in managerial positions has increased from 5% up to 10-15%, and by 2005, the consortium plans to increase the number of Kazakhstani managers up to 22%.
Thus, at the beginning of 2004, 50 Kazakhstani employees from the KPO Production Directorate began training in the Management for Supervisors programme as part of the Supervisory Management Programme (SMP), certified by the Chartered Management Institute from Great Britain. During the 11-month-long training course, conducted in a modular format, they will study disciplines necessary for the successful performance of medium level managers. This programme supplements the technical courses excellently without an interruption in work, and is organised by KPO as part of the national personnel-training programme. Following the course, students will take the attestation and upon completion receive international training certificates. KPO has allocated over 65 million tenge for this course.
With the purpose of reducing costs, the improvement of working procedures and interrelation between various departments of the company, KPO introduced the Plan of Improvement of Production Efficiency (PIPE). Currently, any KPO employee who has a proposal to improve production can make his or her own contribution to this process. In spring of 2004, five national employees in the consortium received certificates of recognition for their individual contribution to the KPOPlan of Improvement of Production Efficiency.
For the proper functioning of the quality management system on the part of its Kazakhstani partners, KPO organises broad training of local companies in ISO standards. Thus, in 2003 KPO rendered financial assistance to eight local suppliers so that they would be able to take part in quality management courses in compliance with ISO 9001 standards being organised by the US organisations USAID and Pragma. Over 100 Kazakhstani companies have taken part in seminars for the improvement of business skills that were organised by the KPO Vendor Development and Qualification Department.
A Time of Great Changes
Almost all inhabitants of the region have experienced a genuine benefit from the Karachaganak project. The most visible changes occurred in the social reorganisation of the West Kazakhstan Oblast, in which the Consortium invests $10 million annually. Built in 1998-1999, the Kaztalovka Village Regional Hospital and the Uralsk Infectious Diseases Hospital were the first results of their cooperation. The Therapy Building at the Oblast Clinical Hospital was also reconstructed and virtually built anew. Recently, this list was amended to include healthcare facilities including the Polyclinic at the Oblast hospital and the Cardiology Centre. It is also notable that the sole use of Kazakhstani contractors for the implementation of social programmes remains a standing rule. The indispensable condition on the part of the customer is high quality, a strict and precise meeting of deadlines and the work schedule, as well as an observation of safety rules.
The mechanism to determine what should be built and where has been clearly elaborated and regulated. The Oblast Akimat makes these decisions based upon requests from local residents. The list of already realised social projects is a broad one, and the construction workers, investors and oblast residents have a right to be proud of these. The Kazakh Drama Theatre, commissioned in 2002, is among the largest. Incidentally, this is the only theatre in Kazakhstan that has been built from scratch during the years of independence. The originality of the architecture and the peculiar ethnic colouring have contributed to the building becoming the adornment of the central square in the oblast centre. Investors’ funds were also used to restore the Oblast Garifolla Kurmangaliev Philharmonic and the facade of the Oblast Ostrovskiy Drama Theatre. The foreign consortium has helped make Teatralnaya Street into a pedestrian area, a favourite recreational place for people in the city.
Speaking of Karachaganak’s contribution to cultural development, one cannot help but mention the fact that KPO is a general sponsor of the annual Uralsk international violin contest. The organiser and permanent chairman of the contest jury is world famous violinist, Marat Bisengaliev. The investors presented unique musical instruments as a gift to the orchestra under his lead, that were manufactured in the 19th and in the beginning of the 20th century by famous instrument makers from France, Great Britain, Germany and the Czech Republic.
Physical culture and sports have also not been left without attention, and national and international sports competitions are conducted regularly in Uralsk. This has become possible thanks to the opening of such facilities including a 1,350 seat Ice Palace, a swimming pool and the reconstructed Atoyan stadium.
KPO funds were also used to build several schools, both in the oblast centre and in rural areas. The Children’s Village was built with special love and care. The national first lady, Sara Nazarbaeva participated in the opening ceremony.
KPO takes a most active part in the construction of roads, the implementation of energy independence programmes and the gasification of the oblast. The Aksai (administrative centre where the deposit is located) water supply system reconstruction project has been completed recently. $20 million was invested in the realisation of this project. These funds were allocated in addition to annual investments in social projects. KPO spends some $200,000 annually for sponsorship assistance alone. The investors refer to this cooperation as a policy of good neighbourly relations. This is truly a succinct notion!

Table of contents
IMSTALCON: in Word and Deed!  Vladimir Khoroshilov 
Recruiting the Right Personnel  Vladimir Sidorenko 
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