KAZAKHSTAN UPSTREAM OIL AND GAS technology and R&d ...

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Industry opportunities – the need for a
sound financial case and business model
Throughout the course of the roadmapping
project, attempts were made to gather views
on the sort of local companies that could
make a positive difference to the way the
upstream oil and gas industry operates. After
much careful analysis, it was concluded that
the most realistic industry opportunities lie
in the area of steel and concrete structural
design and fabrication, the provision of
upstream chemicals and well sand-screen
manufacturing.
Further opportunities were highlighted: the
manufacture of corrosion-resistant alloys;
provision of SCAL services; jack-up rigs for
cold climates and ice-scouring design; and
sulphur storage, transport and products.
However, there were thought to be blocks
to progress in each of these cases. The
high cost of corrosion-resistant alloys could
theoretically be allayed by setting up local
production facilities; however, manufacturing
(and testing) capabilities in Kazakhstan
were thought to be lacking. In the case of
SCAL services, for which there is strong
local demand, there has been a lot of
investment in the last year, but there are
further upgrades desired by the operators.
There was a good deal of discussion around
the subject of jack-up rigs for cold climates
and ice-scouring-resistant design. However,
technology in these areas is immature
globally and both will require a combination
of R&D and heavy industry participation
to move the technology forward; as
such neither offers immediate industry
opportunities. Sulphur storage, transportation
and products seem like perfect opportunities
for Kazakhstan to build local capability. But
two critical things must happen before these
will be realised. There needs to be overhaul
of the regulations surrounding the use of
sulphur; and the markets in Kazakhstan need
first to be created and grown.
While the roadmapping project has
succeeded in identifying real opportunities
for local companies in Kazakhstan, in the
longer term a more formal and rigorous
approach is needed to maintain a
continuous flow of similar ideas. Ideally,
this ought to be overseen by a strong
government/industry council. Its role would
be, in the first place, to invite oil and gas
operators to provide regular information
about their materials, products and services
requirements, the scale of these requirements
and their timing. This market research
would be made available to the relevant
international and local companies who
would subsequently be invited to put forward
local manufacturing and service solutions
– ideally with strong local job creation,
technology transfer and supply chain
development credentials.
A sound financial case and an
effective business model (including skills
development and training needs and
based on, for example, a joint venture,
licensing agreement or a wholly foreignowned,
locally registered company)
would be a condition of the opportunity
gaining government support. For such
a process to work, there needs to be
good communication and open dialogue
between government and industry. There is
a widespread view that there needs to be
less bureaucracy surrounding the import of
goods and equipment and that the business
regulatory environment has to become
more fluid and transparent and easier to
negotiate.
Kazakhstan Upstream oil and gas technology and R&D roadmap