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  • NCOC (current)
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NCOCLocal Content
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Local Content

local content

NCOC believes that activities performed under the NCSPSA offer a significant opportunity to develop the Kazakhstan economy in a sustainable manner.

First and foremost, we believe this can be achieved by managing our own business safely, responsibly, efficiently and transparently, in compliance with all applicable laws and regulations of the Republic of Kazakhstan.

The Kashagan project marked the start of the offshore oil development in Kazakhstan. When the decision was made to implement this highly challenging project; support bases, infrastructure, construction equipment, marine vessels and drilling rigs needed for the development of the project did not exist in the Caspian region.

Substantial investments into the development of local suppliers, workforce and infrastructure have resulted in the establishment and growth of various industries in Kazakhstan.


The achievements in driving local content development are reflected by some impressive numbers:
  • From 2006 to 2020 about 1,600 local companies have participated in workshops and forums organized by NCOC N.V. These range from general awareness seminars to introduce the project and its contracting requirements, to more specialized seminars on tender writing and pre-qualification processes.
  • From 2006 to 2020, the Operator assisted around 220 local companies to obtain international standards certifications for their management, goods and services, thus significantly increasing their competitiveness for contracts with NCOC N.V.
  • From 2006 to 2020, NCOC N.V. conducted about 430 technical qualification audits and site visits of local companies, assessing their ability to meet demanding specifications and international codes and standards for goods and services put out for bid by the North Caspian Project.
  • From 2006 to 2020, the Operator provided more than 4,900 employees of local companies with specialized professional training in the most in-demand craft skills, on topics such as Working in Confined Spaces, Industrial Welding Safety, Electronic Systems and Assembly, Working at Height, Mobile Crane Operations, etc.
  • Also, about 450 employees of local companies have successfully completed NDT training courses and certification arranged by NCOC N.V. from 2015 to 2020.
  • NCOC N.V. assisted and provided financial support for local company in obtaining the ASME international goods and services certificate in 2020.

Localization

localization

The greatest opportunity for NCOC in local content is in conducting the potential ‘Early Tenders’ scope. NCOC is seeking for the opportunities to fully exploit such category of materials. There is limited opportunistic OEM only scope that may be available for COMPANY to pursue. In such cases, COMPANY will seek from the OEM to get local value adding facilities to be set up in Kazakhstan.  In all other cases, COMPANY will work to develop the vendors to either set up local distribution facilities or in some cases assembly testing and certification facilities to support local content development. The COMPANY has also developed a Local Content Memorandum of Understanding to be

included in the Form of Contract. This memorandum is a layout the COMPANY’s Local Content strategy, and acts as a commitment for SUPPLIERS to engage in discussions with the COMPANY on opportunities to increase Local Content by taking incremental steps toward localizing the supply in relation to the framework agreements. All OEM’s will be required to develop a local content plan, and the Company will work to implement the steps in these plans with the support of PSA LLP and KazInvest.

Original Equipment Manufacturer (OEM)

OEM vs Non-OEM

Non-Original Equipment Manufactured (Non-OEM)

A Original Equipment Manufacturer (OEM) is a company that manufactures original parts and equipment

A Non-Original Equipment Manufactured ("Non-OEM") parts and equipment, also known as aftermarket parts, are generic parts produced by independent manufacturers who manufacture replacement parts and sell them cheaper than the original equipment manufacture

Early Tender, MOU, & Localization Overview

NCOC IS COMMITED TO LOCAL SUPPLIERS, PROVIDED THEY MEET QUALITY, SAFETY STANDARDS AND OFFER MATERIALS AND SERVICES COMPETITIVE IN PRICE, QUALITY AND AVAILABILITY TO THOSE PROVIDED BY INTERNATIONAL SUPPLIERS. BUT HOW DOES ONE DEFINE “LOCAL SUPPLIERS”? AND WHAT IS THE BEST WAY TO IDENTIFY AND RESPONSIBLY DEVELOP THEM? NCOC’S OBJECTIVES ARE TO:

  • SUPPORT GROWTH OF LOCAL EMPLOYMENT AND JOBS FOR KAZAKH NATIONALS
  • ADD VALUE IN KAZAKHSTAN, BY PERFORMING MORE WORK OR MORE ASSEMBLY AND MANUFACTURE IN-COUNTRY
  • ATTRACT ADDITIONAL FOREIGN INVESTMENT
  • PROMOTE TECHNOLOGY TRANSFER FROM INTERNATIONAL COMPANIES OR PARTNERS TO LOCAL COMPANIES
  • CREATE AND PROMOTE KAZAKH ENTREPRENEURS, IN THE FORM OF COMPANIES AND JOINT VENTURES WHERE KAZAKH CITIZENS OWN EQUITY AND TAKE ACTIVE PART IN MANAGEMENT
TO MEET THESE OBJECTIVES NCOC HAS BEEN IMPLEMENTING “EARLY TENDERS”. THE MECHANISM IS WORKING WELL, AND WILL LEAD TO EVEN GREATER KAZAKHSTAN CONTENT IN FUTURE.

The idea is to find locally-based suppliers in key categories who will commit to invest and work closely with NCOC with clearly-defined scope and under long-term contract to gradually increase their Kazakhstan content in a “staircase” approach.

Early tender initiative

At each “step” of the staircase, the supplier’s business plan moves from simply warehousing imported goods, to assembly, testing and certification in-country, then basic manufacturing, and finally advanced manufacturing and sourcing domestic raw materials. Each “step” is a step-up in value added within Kazakhstan. Each “step” also requires the supplier’s commitment

Contract Strategies

The full scope of equipment, materials, spare parts and consumables is split into four individual categories: Rotating, Mechanical, Electrical, & PACO (Instrumentation).

A contracting strategy has been developed for each of the four categories. Each individual ‘category’ contracting strategy will detail how the proposed procurement approach outlined in this overall strategy will be implemented, the actual contracts to be awarded, and how it captures local content opportunities.

C&P Materials Management team covers the planning, organising and control of activities related to procurement of equipment, materials, spare parts and consumables (Items) by NCOC. The complete end-to-end materials management process includes the following activities:

  • Understanding and managing NCOC’s demand for Items
  • Procurement of Items from local and international suppliers
  • Transportation of purchased Items to and within RoK (freight forwarding)
  • Customs clearance
  • Warehousing / storage
  • Inventory management & distribution
  • Increase Local Content in material supply

Contracting Strategies (General Procurement: approach and principles)


Products with high potential for localization (Rotating Category)


Rotating Category Tenders


Mechanical Category

Memorandum of Understanding has been concluded with the following companies:
  • Valvitalia SPA
  • Flowserve Kazakhstan LLP
  • Liebherr Kazakhstan LLC


Mechanical Tenders & Early Tenders

Competitive Tenders

  • Procurement of Non - OEM Mechanical Process Filters
  • Procurement of Non – OEM Crane spare parts
  • Procurement of Non – OEM Fired Heaters and Boilers
  • Procurement of Non – OEM Hand Tools
  • Procurement of Non – OEM Insulations materials
  • Procurement of Non – OEM Pressure Relief Valves and spare parts
Early Tenders

  • Procurement of Non - OEM Pipes and Piping Fittings
  • Procurement of Non - OEM Hose assemblies
  • Procurement of 3” and below Valves
  • Procurement of Non - OEM Lifting accessories
  • Procurement of Non - OEM Gaskets
  • Procurement of Non - OEM Fasteners
  • Procurement of Non - OEM Flanges
  • Procurement of Non - OEM Mechanical HVAC Filters
Products with high potential for localization (Electrical Category)


Memorandum of Understanding has been concluded with the following companies:

  • ABB KZ
  • General Electric (Power)
  • Schneider Electric
  • Caterpillar/ Borusan Makina Kazakhstan llp
  • Borri


Eelectrical category Tenders


Competitive Tenders

  • Non-specific OEM accessories and components associated with Generators
  • Non-specific OEM accessories and components associated with Motors & Transformers
  • Non-specific OEM accessories and components associated with UPS & Switchboards
  • Non-specific OEM accessories and components associated with Lighting, Cables & Cords, and VSDs



Process Automation, Control & Optimization Category (Instrumentation)


Memorandum of Understanding has been concluded with the following companies:

  • Valvitalia SPA
  • Flowserve Kazakhstan LLP
  • Baker Hughes a GE company
  • Siemens LLP
  • Simtronics (Altezza LLP)
  • CCI Valve Technology GMBH
  • PARKER HANNIFIN/ Gateway
  • Rockwell Automation (Power Technology Solutions LLP)
  • KMG Automation
  • ENDRESS + HAUSER
  • Compressor Controls Corporation
  • PEPPERL+FUCHS (Power Technology Solutions LLP)

Local Content Policy

Some definitions in accordance with the «On Subsurface And Subsurface Use» Act

Unified Methodology for calculation by organisations of Kazakhstan's content in procurement of goods, work and services — the procedure to be approved by the Government of the Republic of Kazakhstan which is applied to calculate Kazakhstan's content in procurement of goods, work and services;

Kazakhstan manufacturer of goods citizens of the Republic of Kazakhstan and (or) legal persons of the Republic of Kazakhstan that produce goods of Kazakhstan origin;

Kazakhstan manufacturer of work, services citizens of the Republic of Kazakhstan and (or) legal persons organised in accordance with the legislation of the Republic of Kazakhstan, with the place of location in the territory of the Republic of Kazakhstan, that use not less than ninety-five per cent of citizens of the Republic of Kazakhstan in the total number of employees;

Goods of Kazakhstan origin goods to which a certificate of origin of goods for home circulation is issued that confirms they originated in the territory of the Republic of Kazakhstan;

Kazakhstan's content in goods a percentage of the value of used local materials and costs of the manufacturer of goods relating to processing of the goods, which are incurred in the territory of the Republic of Kazakhstan, in the final value of the goods;

Kazakhstan's content in work (service) a total summarised portion of the value of Kazakhstan's content in goods that are used in performance of work, in the price of a contract and (or) work remuneration to employees who are citizens of the Republic of Kazakhstan in the fund for work remuneration of the manufacturer of work (service) under a given contract for performance of work or rendering of the service, less the value of goods that are used in performance of work, and prices of subcontracts;

Kazakhstan's content in personnel a number of Kazakhstan personnel in per cent of the total number of personnel engaged in the implementation of a given contract, with breakdown by categories of workers and clerks;

Local Content Development Activities

Industry Development

The operator has developed a systematic approach to local industry development, which in turn, represents a cyclic process with four main phases: planning, development, realization and monitoring.

As part of planning phase the Venture developed and enendorsed the long-term Programme for the development of local content to identify Kazakhstan market opportunities and potentioal, raise local suppliers' capabilities within the framework of developing the Kashagan field and other projects where specific objectives have been set for increasing the proportion of local content.

local content

For all contracts the local content strategies are implemented at the earliest possible stage allowing for capacity development of local companies.

During engineering and design stages of work the opportunities for local suppliers are maximized to ensure that out of country engineering contractors incorporate wherever possible local specified materials and equipment within design(GOST).

To leverage local content development opportunities the analysis of the future needs of the project is carried out and consolidated in the Company's long-team procurement outlook.


On September 25 2012, the Aktau Declaration on joint actions was signed between NCOC, KazMunaiGaz, TCO and KPO.

Aktau Declaration

The Operator signed Aktau Declaration on joint actions (“AD”) on 25-Sep-2012 with: 1. Karachaganak Petroleum Operating ("KPO"); 2. JSCN C "KazMunayGas (""KMG") 3. Tengizchevroil ("TCO").

The AD is intended to develop a mechanism to improve the coordination and Consistency of individual Local Content industry development programs of Operators, investors and Agencies to allow for the exchange of non-sensitive and non-confidential data and development of new initiatives with achievable sustainable outcomes and timescales.

An Industry Task Force has been formed, comprising industry stakeholders, to deliver and implement the AD. The functions of the Industry Task-Force is to identify synergies, advance the outcomes of current local content development programs and define new tasks to contribute to the growth of sustainable local supply chain capacity.

Priority front end activity topics intended to be addressed by the Industry Task Force together with other relevant associations are:

• Preparation of a comprehensive project demand and supply to be agreed by Operators to ensure that all initiatives within the AD are based on a thorough understanding of local content sustainability.

• Clarify the constraints of local content industry development initiatives as a result of Operators working within different contractual frameworks (PSA, JV).

• Provide consensus on the extent to which harmonization of prequalification and tendering processes can be accommodated, acknowledging that Operators work with different corporate practices.

• A review of all established and emerging local content industry development programs to allow synergies and opportunities for cooperation and support.

Manpower Development

The dynamically developing oil and gas sector offers a lot of opportunities to the young Kazakhs. By virtue of its innovation and technical complexity, it requires the utmost professionalism from those working on it.

In line with the provisions of the agreement on the North Caspian, the requirements the law and the plans and objectives set by the head of state, NCOC and the agent companies are seeking to increase local content to a maximum. The Venture has drawn up a long-term programme for raising the professionalism of Kazakh specialists with the aim of gradually replacing foreign staff with local personnel.

manpower

The operator uses a variety of approaches and procedures in its efforts to, over time, substitute foreign specialists with skilled local workers, who are suitably trained and experienced. A nationalization program guides this process.

Nationalization Of The Workforce

The PSA specifies (art. XXVII) the overall targets in terms of manning levels of Kazakhstan citizens employed in carrying out Petroleum Operations. The Kashagan Venture significantly exceeds these targets as it is shown in the figure below.

At peak time in 2010 the Project employed more than 42,000 people (including contractors), hence it was one of the biggest employers in Kazakhstan.

As of beginning of 2015 88% of staff working for the Kashagan project are Kazakhstani citizens.

Meet Our Contractors

Success stories (incl. video films)

KCOI

Cooperation is the key to development

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Boehmer Armaturen Kazakhstan

German quality is the key to success

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«АтырауНефтемаш»

100 Year Experience in Machine-building

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«West Dala LLP»

Steer / Heading for Green Economy

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«Entering the world market»

On successful API certification.

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«Large scale improvement»

On successful API certification.

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«Development of marine industry»

How Kashagan Project inspired the development of Kazakhstan oil service company in marine industry.

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«20 - year experience of cooperation»

About the Scientific and Research Centre with 20 - year experience of cooperation in geological and geophysical activities with the North Caspian Project.

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“Reaching New Heights”

About Montazhspetzstroy, one of the flagship engineering companies in Kazakhstan, which could become a leader in the national market of engineering, structural, installation and commissioning activities over the years of independence.

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“A Flagship of Offshore Operations”

About a leading national company providing the offshore petroleum operations support services in Kazakhstan Sector of the Caspian Sea, which is actively involved in Kashagan development and implementing a variety of onshore infrastructure projects. Currently it complies with the highest international offshore petroleum operations support standards.

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“How to become a leader”

History of development of one of the largest offshore contractors in the North Caspian Sea, which succeeded to become one of the leaders of Mangistau industry within 10 years’ time.

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“Finding your own harbor”

About challenges one faces when competing with international companies and about how Kashagan gave a start in life to Kazakhstan’s first private shipowner company.

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“Sea of our hopes”

About creation of a new services domain in Kazakhstan for offshore petroleum operations and about setup of a first domestic offshore catering company.

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“Those beloved by waves”

About captains of the North Caspian sea, those professions, which Kazakhstani citizens started to explore after gaining independence.

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“Formula of Stability”

About construction of the Bolashak plant and how the company, which has the richest background of cooperation with the North Caspian Project, operates these days.

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“A journey of thousand miles begins with a single step”

A history about how a product of one of the most promising companies in Atyrau achieved a world quality level in the oil services market.

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“Your experience – your primary ally”

About how the experience of UK specialists helped a company become one of the largest JVs in the area of engineering services.

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“New leaders generation”

About young Kazakhstanis and new generation of national specialists who came to replace foreign managers in the Kashagan project.

Supply Chain Management

TYPICAL VENTURE SUPPLY CHAIN PROCESS

NCOC's procurement activities are ethical, fair, transparent and non-discriminatory, in accordance with the NCOC Code of ethics and in compliance with all applicable legislation and the PSA: a selective competitive tendering method is adopted in reaching a contract award decision, treating tenderers with absolute fairness and maintaining confidentiality.

Procurement Process
Qualification

The Prequalification process executed by individual agents aims at populating the NCOC Vendors List (containing details of each supplier who has been evaluated against the requirements associated to an NCOC commodity class) who can then be considered for participation in tenders.

Market Intelligence - NCOC is committed to identifying vendors that can be potentially involved in its business. Vendors can be contacted by the Agents directly or through a vendor's self-request. If you want to provide NCOC with general information about your business, please fill the form at the and the top of this page.

Once the form is received, NCOC will register it in a dedicated Market Information Database where it gathers and stores information on possible suppliers for use by the Company. This registration does not automatically result in qualification.

In case potential user decides to move a vendor from the Market Information Database to its Vendor List, a qualification process will be started and the vendor will be assigned to specific Supplier Quality Engineer (SQE).

The SQE will contact, guide and assist the vendor through the qualification process from start to end.

During this phase, the vendor is required to provide the CH with all requested, relevant and necessary information. Failure to provide this information may result in the process being cancelled.

Vendor evaluation - this phase aims at assessing vendor capabilities and compliance with NCOC prequalification criteria and against a specified commodity class.

This task is performed through:

  • analysis of gathered information
  • meetings
  • on-site visits (if appropriate)
  • other sources of information (if appropriate)

Once the evaluation is complete, certification of the result is issued to the vendor by the qualifying Agent.

Tendering and Contract Awarding - aims at awarding the contract to the Tenderer who submits the most economically advantageous and technically acceptable offer, as a result of a competitive tender process.

  • Tender List - For each requirement a specific Tender List, including all companies to be involved in the tender, is drawn by C&P Department from the NCOC Vendor List. In doing so, the Company takes all reasonable efforts to maximize the opportunities for Kazakhstani suppliers of materials and services. The Contract Holder defines the scope of work, the technical specifications, quantities and delivery requirements for the contract.
  • Preparation, approval and issuing of the Invitation to Tender (ITT)
    Invitation to Tender packages are prepared by the C&P Department and sealed offers from a minimum of three Tenderers (whenever possible), are sought for all goods, works and services. NCOC does not bind itself to accept either the lowest or any offer, and is not responsible for, or will not pay any expenses incurred by the Tenderer in the preparation and submission of its tender. NCOC Tender writing procedure is available and provided through this link for your information.
  • Communications with Tenderers
    Tenders can receive technical written clarification on any of the aspects of the tender through a single communication point within the relevant C&P section. Any clarification or information provided by the Company at this stage is distributed to all Tenderers to ensure that they all compete on an equal basis.
  • Tender Submission
    To guarantee the best technical and economic outcome of the tender NCOC may provide the Tenderers with standard reply labels and envelopes so that offers can be submitted in two separate envelopes: unpriced, technical offer and priced, commercial offer.
  • Tender Evaluation
    The evaluation of the technical and contractual offer is carried out by the Contract Holder of originating department and the relevant C&P section whilst the priced envelope is kept under the safe custody of C&P and is opened only if the Tenderer has passed the technical evaluation.

LOCAL CONTENT

  • Local Content

LOCALIZATION

  • OEM
  • Early Tender

LOCAL CONTENT POLICY

  • Local Content Policy
  • Some definitions in accordance with the «On Subsurface And Subsurface Use» Act

LOCAL CONTENT DEVELOPMENT ACTIVITIES

  • Industry Development
  • Aktau Declaration
  • Manpower Development
  • Nationalization Of The Workforce

MEET OUR CONTRACTORS

  • Success stories (incl. video films)

PROCUREMENT PROCESS

SINGLE WINDOW FORM – for questions and suggestions LOCAL CONTENT BROCHURE 2019

NCOC
  • About North Caspian Project
  • North Caspian Project Major Milestones
  • NCOC Governance and Management Systems
  • Production Operations Progress
  • Caring for the Environment
  • Unique Landscape
  • Unique Wildlife
  • Environmental Stewardship
  • Economic Benefits to Kazakhstan
  • Local Content
  • Social & Infrastructure Projects
  • Sponsorship programme for RoK students
  • Sponsorship & Donations
ETHICS AND COMPLIANCE
WORKING WITH NCOC
  • Individual
  • Supplier
  • Procurement process
  • HSSE Training courses
PUBLICATIONS
NEWS
SUSTAINABILITY
  • Sustainability Report 2021
  • Sustainability Report 2020
  • Sustainability Report 2019
  • Sustainability Report 2018
  • Sustainability Report 2017
  • Sustainability Report 2016
  • Sustainability Report 2015
  • Employees’ Area

© North Caspian Operating Company