PetroKazakhstan: Striving for Leadership through Harmony
Mr. Bo Qiliang, Presidentand Chief Executive Officer of PetroKazakhstan Inc., answers the questions of Kazakhstan international magazine.
You have been working in the oil and gas sector for over 20 years. What made you choose this profession? What stages did you pass in your life before you became President of PetroKazakhstan?
I was born in the petroleum province of China called Shandong, where the country’s second largest oilfield, Sheng Li, is located. From the very early age I learnt a lot about oil and got some knowledge about oil production. In 1979 after passing a national enrolment exam I was admitted to the East China Institute of Petroleum, now called China University of Petroleum.
If you ask me why I chose this profession, first of all, I was attracted by the challenges of it. Every day you discover something new and make new achievements. You have to be creative and grow by constantly moving forward. That is why I made this decision for myself.
My educational background is oil reservoir engineering. This field of petroleum engineering is a combination of different science subjects: geology, geophysics, mechanics, electronics and IT-technologies. The oil and gas industry in general is a key industry for the overall economic development and is getting more and more important today. The ability to contribute to the social development and improvement of people’s well being is what makes me proud of my job.
One of the most important stages in my career was my studies at the Massachusetts Institute of Technology. As a rule, eight years ago top managers of Chinese companies had excellent technical education but they needed knowledge in management and business administration. That was the reason why many companies, including CNPC, started sending young mid–level technical specialists abroad by paying for their education. I was among the first whom CNPC selected for studies abroad and who came back to work for the company after getting an MBA degree.
Good education enabled me to acquire sound knowledge and skills not only in technical area of oil production, operation and technology but also in international business management and cross-cultural relations. All this allowed me to gain confidence and appropriate flexibility – the features that are of top priority today for managing a company like PetroKazakhstan.
We know that a new management team came to the company together with you. What is PetroKazakhstan’s development strategy currently based on?
If we can put it in one word, it will be harmonization. I was raised in an oriental culture but I also got some Western education. This helps me better understand some specific features of Kazakhstan. In the sphere of business management and administration, we strive for harmonization of relations among all the stakeholders: the government, the company shareholders, employees, contractors and business partners. We always try to reach a balance of interests or a ‘win-win’ environment, that can provide benefit to all the parties. Our success is based on the combination of international business standards, local features, laws and regulations, and CNPC technologies and innovations.
Our aim is to make PetroKazakhstan a recognized leader of the petroleum industry of the Republic of Kazakhstan. We want to be an exemplary corporate citizen and present value to our shareholders and the Republic of Kazakhstan by protecting health, safety and environment. With our shareholders’ advantages in technology, management, culture and teamwork, by continually improving management efficiency and company performance, inspiring leaders and developing employees, we would like to fully achieve our growth potential.
Our corporate strategy for 2008-2010 is to increase reserves, achieve replacement of production by new or additional reserves, maintain crude oil production while ensuring controlled decline, enhance yields of refined oil product processing, increase cash flows and net asset value and improve overall operational safety.
What production results did the company reach in 2007?
The company’s 2007 overall crude production volume (including PKKR, 50% interests in Kazgermunai JV and Turgai Petroleum JV) made 52.542 million barrels of oil (6.783 million tons of oil) or an average of 143,950 barrels of oil per day (or 18,583 tons). There was a slight decrease of oil production as compared to 2006 production of 53.124 million barrels (6.858 million tons) or 145 026 bopd (18,788 tons) per day, as a result of an exceptionally cold winter in 2007.
An overall number of 35 production wells were drilled in the fields under development and the reservoir hydraulic fracturing program on 31 producing wells was continued – all this allowing to improve the oil recovery of these wells. New oil bearing horizons were revealed as a result of geological study in Aryskum field under development. It is expected that the oil and gas reserves of this field will be increased.
Exploration is the future of our company and the generator of its growth. In 2007, PetroKazakhstan continued its active geological exploration and drilled 21 exploratory well including two wells in KazGerMunai JV. During this time frame 2D and 3D seismic exploration work was done on license areas as well as detail processing and interpretation of seismic data. A re-assessment of the oil and gas reserves was done on North Nuraly field license area. The report on this field reserves calculation was submitted to the State Reserves Committee (SRC). New oil bearing horizons were revealed as a result of geological study in Aryskum field under development. It is expected that the oil and gas reserves of this field will be increased.
Also increase of reserves in Kyzylkiya field is anticipated as a result of exploration in the northern and southern expansion of this field, as well as perspective Paleozoic deposits. In 2007, a re-assessment of the fields’ hydrocarbon reserves started and is currently underway.
PetroKazakstan is an integrated energy company which operates “from the well head to the service station”. In this context, how does your downstream business – refined hydrocarbon production and sales – develop?
The Shymkent refinery, built in 1985, has the annual production capacity of 5.25 million tons. In 2007 the Shymkent refinery (PetroKazakhstan Oil Products LLP) produced 31.23 million barrels of oil (4.06 million tons), comparing to 31.27 million barrels of oil (4.04 million tons) in 2006.
We continued our work on the re-equipment of oil tanks including removing oil sludge and rendering overhaul and reconstruction of an oil tank 304/4 with a capacity of 20,000 tons. Obsolete equipment of two transforming stations was replaced, which is essential for continuous operation of these stations.
Maximum of petroleum release with high octane rating of more than 50% was achieved from the total petroleum percentage, and the light oil products’ ratio to the value of the refined oil made about 62%.
The company’s overall investment into the modernization amounted to $19 million. In 2008 the planned modernization will allow to achieve the production increase in light oil products, improve the quality of refined products to EURO-3 standards, increase range of petrochemical products:polypropylene, benzyl and elementary sulphur, and reduce harmful discharges by the refinery.
What is PetroKazakhstan’s policy in terms of corporate social responsibility?
The corporate social responsibility is the company’s top priority. Protection of the environment, health and safety of our people is an indispensable part of our social responsibility.
Recently held first Republic’s Forum on social responsibility of business in Zhezkazgan with participation of President Nazarbayev has shown the importance of this policy today. It also encouraged us in PetroKazakhstan to enhance our social responsibility and develop more effective charity and sponsorship projects.
I strongly believe that the success of our business depends, to a great extent, on the stability and well being of the people where we operate and where our employees and their families live. That is why we are interested not only in increasing our production but also improving the life of the people and developing the social infrastructure of the regions where the company works and where our employees live.
In your expert opinion what trends will play a key role in the development of the world oil and gas industry in the next ten years?
This is a broad and complex issue. In general, from the production point of view, we need to focus on introducing new technologies in order to increase oil recovery that, in turn, will enable us to utilize hydrocarbon resources more efficiently.
Another direction is increasing investment into the protection of the environment. This is the issue of great significance not only for Kazakhstan but also for the global oil and gas industry.
Sometimes it feels like the Government of Kazakhstan is forcing the oil companies to conduct the gas utilization, while the companies themselves are just plodding along it…
I think it is not exactly that way. Of course, I’m not able to speak for all the oil producers, but when it comes to our company, I could proudly state that PetroKazakhstan alone spent more than $150 mln on gas utilization within the last three years. As a result almost all of the small flares today are dismantled and stopped burning. On two fields we started re-injecting gas into the gas cap and that increased the oil recovery and improved the protection ofthe environment. Besides that associated gas is used for producing the energy in gas-turbine power plants.
From my point of view, power pressure and simple increase of fines is not the best solution to achieve improvement in environmental protection. The issue of gas flaring could be fully resolved only by coordinated efforts of the government and each oil company, by elaboration of programs and acceptable terms of gas utilization implementation.
It is quite symbolic that you were oneof the torch-bearers who ran with the fire of Beijing Olympic Games through the streets of Almaty. What did you feel at that moment?
I’m very proud that I was among eighty torch-bearers, who were lucky enough to bear the Olympic fire. Especially taking into consideration the fact that Almaty was the first city to host the torch of Beijing Olympic Games of 2008. That is a great pride and honour for me. While I was bearing the Olympic fire I felt that my mission symbolizes friendship between our two nations, long-term economic cooperationbetween China and Kazakhstan.
Mr. Bo Qiliang was born on December 3, 1962.
Mr. Bo Qiliang holds a BSc Degree in Production Engineering from East China Institute of Petroleum, a PhD in Oil and Gas Field Development from the China University of Petroleum. He also holds an MBA from Massachusetts Institute of Technology, USA.
Mr. Bo Qiliang hasover 20 years of experience in the oil and gas industry. Mr. Bo Qiliang has held the following positions with CNPC: Senior Vice President of PetroChina International Ltd., President of the PetroChina International companies in Indonesia, and Vice President of the CNPC Research Institute of Petroleum Exploration Development, Senior Vice-President CNPC International Ltd, and President of CNPC Exploration and Development Ltd. Today Mr. Bo Qiliang holds the positions of President and Chief Executive Officer of PetroKazakhstan Inc., President of PetroKazakhstan Kumkol Resources and PetroKazakhstan Oil Products, President of PetroKazakhstan Overseas Services Inc. and Head of Almaty Branch of PetroKazakhstan Overseas Services Inc.
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