Issue # 2 (104) | 2013

 
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• KIOGE – LONG-TERM SUCCESS
• KIOGE – THE CENTRAL EXPERT PLATFORM FOR CENTRAL ASIA
• VIP OPINIONS
• SUBSOIL USE IN KAZAKHSTAN
• RIXOS WELCOMES KIOGE 2013
• TRADITIONAL KAZAKH SOUNDS
• A COMFORTABLE GERMAN EVENING

KIOGE – LONG-TERM SUCCESS KIOGE, the annual Kazakhstan International Oil and Gas Exhibition and Conference, opened on the first day of October in Almaty.

As a joke (although there is a large amount of truth in this joke), you could say that nature itself was delighted with the exhibition: the opening day turned out to be simply perfect from a weather point of view. Also, the number 13 is viewed with caution, but here it symbolises success – in 2013, KIOGE entered its third decade, having confirmed its deserved reputation as an exceptionally successful business and exhibition event in the whole of the Central Asian region.

As is tradition, KIOGE took place with official support and active participation from the Ministry of Oil and Gas of the Republic of Kazakhstan, KazMunayGas, the Almaty Mayoral Administration, the Union of Oilfield Service Companies of Kazakhstan (KazService) and diplomatic missions of participating countries. The organisers of this well-known event are longstanding partners: the Kazakhstani exhibition company Iteca and the international ITE Group, as well as partners from Germany, China, the UAE, Poland, Russia and Turkey.

Opening the KIOGE 2013 exhibition, Graeme Coombes, Director of Oil and Gas Projects at ITE, began by mentioning an important event – the recent start of oil production at the Kashagan field.

“This moves Kazakhstan even higher in the international ranking of oil-producing countries. This new development will benefit all of Kazakhstan and all of us here, everyone involved in the oil and gas industry. Your presence here is extremely important for us, and all of you play an important role as Kazakhstan enters a new era of success in extraction, production and refining of oil.”

Mr Coombes thanked the local organisers in particular – Iteca – who this year surpassed themselves with new organisational projects within the exhibition. For example, new technology such as the KIOGE mobile app and the meeting planning system using personal accounts on the event website is being used at KIOGE for the first time this year. 16 touch-screen information points located across the exhibition can now also be used to find exhibitor stands by company name on an interactive exhibition plan, or to get information on exhibiting companies.

With this, KIOGE has confirmed its reputation not just as the most important information event in Kazakhstan’s oil and gas sector, but also as an effective channel for the latest exhibition technology and solutions to come to Kazakhstan. Boris Danilenko, Sales Director of Iteca, had every reason to describe KIOGE as a “unique exhibition and conference in Kazakhstan and the CIS.”

This year, 462 companies from 22 countries exhibited in five pavilions of the Atakent Exhibition Centre. As the exhibition’s organisers confirm (and this is actually a longstanding trend), the number of Kazakhstani exhibitors at KIOGE is growing year on year, and this year they have the largest share of exhibitors by country for the first time, with 33%.

This figure should perhaps be considered foremost among the long-term and strategic successes of the exhibition: after all, facilitating successful implementation of government economic policy is always included among the tasks of similar events that are important from an information point of view. The focus of the Head of State and the Government of Kazakhstan on the development of the country’s own producers of goods and services is widely known.

“We are again exhibiting at KIOGE, just like every year starting from 1996, and we aim to do so in future,” said Pavel Beklemishev, General Director of Byelkamit SGT Group. “The exhibition is taking place in a special atmosphere this year – the start of oil production at the Kashagan field, and many projects being in a pre-launch position in Kazakhstan’s oil refining sector. This whole collection of major projects says that there is interest in our country from real business players.”

Belkamit itself has taken a liking to the same location for its stand for several years now, and the company improves its stand year on year. Mr Beklemishev characterised participation in the exhibition as a convenient and effective way for companies to confirm their positions in the market: “’Flying the flag’ then turns into absolutely specific business contacts.”

Kazakhstan aside, a range of countries are presenting national stands at KIOGE 2013, just like at previous exhibitions. These countries are Germany, Italy, Canada, China and Russia. The Russian stand is one of the most extensive.

Presenting the stand of his region, Vladimir Nefedov, Minister of Industry and Innovations of the Nizhny Novgorod Region, highly rated both cooperation with Kazakhstan in the oil and gas industry and the opportunities that exhibiting at KIOGE offers:

“Taking part in the exhibition successfully demonstrates our competitive advantages! In the Nizhny Novgorod Region, it has become an important tradition to take part in such an important international event. We are doing so for the third time now, and our exhibitors are becoming more and more numerous.”

The Minister also underlined that the region’s government strongly intends to take part in the exhibition in the future as well. It needs to be mentioned that this region is one of the most industrially developed in Russia, with a very high share of oil and gas engineering in the production structure. The strong interest of such major regions in KIOGE is yet another important testament to its reputation.

However, there are also Russian companies at KIOGE 2013 that have come to the show as exhibitors for the first time. One of them, ZERS RDC, which is well known among professionals in Russia, decided to enter Kazakhstan’s market through participating in the exhibition.

“Kazakhstan’s market is very interesting for us, because it is very promising for our equipment. We have a mass of new developments and we are ready to offer them here. The lack of borders between our countries in view of the operation of the Customs Union allows the minimisation of time periods for this route. We held several presentations in Kazakhstan, and as a result decided to take part in the exhibition to give a certain information push, so people can learn about us here,” said Dmitry Zhuravsky, leading specialist in the company’s sales department.

In general, the share of Russian companies at KIOGE in terms of overall exhibitor participation is almost as large as the Kazakhstani share – 31%. The range of companies is the broadest yet! After all, the traditional function of KIOGE is to unite and present countries, companies and the widest possible variety of services.

The stands at KIOGE 2013, both national and corporate, are again an example to follow for exhibition design. For example, the main qualities of the Chinese stand are its vibrancy and size, while that of the German stand, on the other hand, is its highly effective use of minimalism. Both these countries are among the exhibition’s largest participants – Chinese companies make up 11% of all exhibitors, and German companies 9.5%.

A very interesting stand in terms of design is a Kazakhstani one, that of Aktau Oil Electronic Company. As usual, though, exhibitors have a choice: presenting themselves in a vibrant and large-scale fashion or in a strictly business format. There are also original combined solutions.

Several exhibitors mentioned the experience of solutions used today that are based on previous participation. Anton Sokolenko, CIS Representative of the Italian company Elettrotek Kabel, mentioned that he is personally taking part in the exhibition this year, because experience has shown the need for a Russian speaker. On the whole, the feeling from last year’s show was positive, as the company is here again.

“Last year a decision was taken to expand in CIS markets, and that was when we came to KIOGE. We carried out our first supply of products to Kazakhstan this year. Now, we are entering your market with partners around Russia,” said Mr Sokolenko.

KIOGE received its launch on 1 October – as always, it was a successful one.

KIOGE – THE CENTRAL EXPERT PLATFORM FOR CENTRAL ASIA The 21st KIOGE Oil and Gas Conference opened on 2 October in Almaty.

Kazakhstan’s oil and gas industry has a long history, and a considerable part of this is connected with the KIOGE conference. The most pressing issues in the oil and gas sector are traditionally discussed here, and the renowned status of the invited speakers ensures a consistently high level of discussion. In all respects, the KIOGE 2013 conference has continued this tradition. With these words from Kuandyk Kulmurzin, Director of the Department of Oil Industry Development of the Ministry of Oil and Gas of the Republic of Kazakhstan, the KIOGE conference opened.

During the briefing of journalists accredited to cover the conference, Sir Andrew Wood, senior adviser to ITE Group, gave something of a summary of over 20 years of experience of KIOGE being held.

“I am pleased that more and more detailed questions are voiced every year at the conference. This speaks of the deepening of general knowledge of its agenda. It seems to me that the conference and exhibition have an opportunity to consolidate processes in the oil community within Kazakhstan and beyond its borders. Also, of course, I am pleased that KIOGE has become a place where foreigners can not just follow these processes in Kazakhstan but influence them as well,” said Sir Andrew.

Carolyne Browne, Her Majesty’s Ambassador to Kazakhstan, expressed her wish that her country’s experience in developing industrial sectors that meet the needs of oil production can be replicated in Kazakhstan. The Ambassador gave the example of Aberdeen, which in 30 years has grown from a small fishing village into a major industrial centre.

“We want this history of success to repeat itself here, in Kazakhstan, from the point of view of building a Caspian knowledge hub where local content and international experience can unite. As a result, a national quality centre could appear, with benefits for Kazakhstan and for the whole of the greater Caspian region,” said the Ambassador.

The British government is committed to supporting the development of Kazakhstani content in oil and gas projects carried out in Kazakhstan with participation from British firms. Over 1,600 local companies from the western regions of Kazakhstan are registered suppliers for oil and gas projects. Here, the Ambassador mentioned the importance of forming an amiable business environment in such projects.

“From the moment I arrived in your country, I was struck by how confidently Kazakhstan is looking forward. The United Kingdom wants to be a partner in its choice.”

Aurelia Bouchez, Head of the EU Delegation to Kazakhstan, mentioned that Kazakhstan is becoming more and more of an important partner for the EU in the energy sphere. Work is currently ongoing on the text of a new partnership agreement between the republic and the EU, and this should open up new opportunities, including in this sphere.

“European investors view Kazakhstan as a very attractive place for investment. Our trade balance is in favour of Kazakhstan, seeing as oil and oil products make up a large part of the republic’s exports to the EU. They make up around 5% of total EU imports. In turn, EU countries have brought new technologies and knowledge to Kazakhstan. We hope that this partnership will expand, and we are confident that Kazakhstan and the EU have a strong mutual interest,” Ms Bouchez underlined.

Naturally, the topic of the development of the Kashagan field was constantly raised at the conference: it could even be said that KIOGE 2013 took place under the total influence of the start of its development. Also, as always, the conference was an important information platform at which the most topical issues were discussed.

Kurmangazy Iskaziyev, Deputy Chairman of the Board for Geology and Prospective Projects at KazMunayGas, noted that all appropriate safety requirements have been adopted at the field.

“We are very satisfied with how the wells are acting. We achieved production levels of 50,000 barrels a day without any evident problems. While talking about resuming production is premature, we will resume as soon as possible,” he said, commenting on recent events at the field.

The normal working process of equipment adjustment is currently taking place at Kashagan, which Mr Iskaziyev called on the public to treat with understanding. Daily production, following resumption of work at the field, will gradually increase from 40,000 barrels to 370,000 barrels. “Kashagan is now at the stage of pilot work,” Mr Iskaziyev underlined.

Alexander Yershov, Editor-in-Charge of Commodities and Energy at Thomson Reuters, offered an interesting perspective on the prospects of Kashagan in his presentation.

According to Mr Yershov, oil and gas is “the main story for Kazakhstan and Russia.” Kazakhstan has managed to maintain a balance in the general situation on the oil market. That is, with a significant share of foreign investors in the oil production sphere, Kazakhstan’s government is trying to increase the role of the state in this sector. Mr Yershov described this as a very important and correct measure.

“However, the general balance of interests needs to be influenced in the long-term as well, and this needs to be realised for it to happen.”

The project to develop the Kashagan field is an international-level event and a global project – according to several forecasts, when production at the field reaches peak levels, it will account for 1% of all oil produced in the world in the period. This is an enormous amount. However, alongside the plus points, this also brings new challenges. Is the market ready for new oil? A very large offering of new volumes of oil in traditional markets could reduce its price. Even now, those taking part in developing the Kashagan project need to think about markets where oil could be sold more profitably.

Another crucial Kazakhstani project in the oil production sector, Tengiz, also came up at the conference. Officials announced that a project to expand its output, which will lead to a significant increase in oil production levels at Tengiz, has received approval in principle.

A highlight of the other topics of the first day of the conference was discussion of issues of cooperation between service companies to increase productivity and oil and gas production – as was the topic of prospects for developing shale gas fields in Kazakhstan. As always, KIOGE is a place to discuss all the topical issues.

The first day of the conference concluded with an important event: a memorandum of understanding on cooperation was signed between Kazakhstan’s national company KazMunayGas and Schlumberger. It will be implemented in issues of assessing and optimising production at several KazMunayGas active fields, exploring new ones, and in operation, well decommissioning and training.

VIP OPINIONS Kuandyk Kulmurzin
Director of the Department of Oil Industry Development
Ministry of Oil and Gas of the Republic of Kazakhstan

It is encouraging to note that the first exhibition, held 21 years ago, opened up Kazakhstan as a region with rich natural resources. Thanks to KIOGE, many international companies have chosen to develop business in our country. The exhibition has become a clear confirmation of the dynamic of the country’s economic transformations. The economy of Kazakhstan is gathering momentum, the oil and gas industry is developing, and large new fields are being put into service. The technology used is becoming ever more scientifically advanced. The Republic’s efforts to develop the refining sector in the industry should be mentioned in particular. Modernisation processes are currently taking place at our large oil refineries. KIOGE continues to remain an effective platform for presenting the latest achievements of global producers. It is a place where our domestic companies can prove their potential and assess their competitiveness in the market.

Nurtas Shmanov
Deputy Chairman of the Managing Board for Transport Infrastructure
NC KazMunayGas JSC

On behalf of KazMunayGas, I would like to thank the organisers of KIOGE for creating a complete working atmosphere at the venues. As always, at KIOGEthe latest global achievements and new technical developments in the oil and gas industry are exhibited which give a representation of the current level of global technologies in production, transportation and processing of hydrocarbon natural resources. We hope that the exhibition will be a platform for broad exchange of experience with international colleagues. KazMunayGas traditionally presents an extensive stand. As the national oil and gas company, KazMunayGas reflects the interests of the government in Kazakhstan’s oil and gas industry and participates in implementing projects to develop hydrocarbon resources both in Kazakhstan and abroad. At our stand, you can learn about the development areas of the country’s oil and gas industry, existing prospects, and possibilities for mutually beneficial cooperation. I think that the special thematic seminars that the organisers have planned to take place during the exhibition will be popular. They allow problematic issues to be presented in a more concentrated manner and joint solution paths to be found for all interested parties.

Vladimir Nefedov
Minister of Industry and Innovations
Nizhny Novgorod Region, Russian Federation

The participation of an official delegation from the Nizhny Novgorod Region in this event has become an important milestone in the history of the development of our foreign economic links. This is the third time now that we have been present at the exhibition, and since 2011 we have had a growth in foreign trade turnover of 15%. Thanks to the exhibition, we can find new business contacts and partners for mutually beneficial cooperation. It is very important for us to take part in both the exhibition and the conference, where we have an opportunity to discuss problems and development prospects in the oil and gas sector, and to consider issues relating to innovations, technologies, and industrial and environmental safety. This is very important for us, because in the Nizhny Novgorod Region’s industrial sector, oil refining makes up a share of 30.5%. The event is very important not just for successful searching for contacts with Kazakhstani partners, but also with those exhibitors that have an opportunity to be presented here.

Sir Andrew Wood
Senior Adviser, ITE Group Plc

In the 21 years KIOGE has been held, a huge number of important and serious projects have been carried out. With every passing year, this event gathers momentum and reaches a new and higher professional level. We can be proud of the creation of a unique platform for holding negotiations and friendly meetings. I would also like to mention that the level of media representatives in the oil and gas sector has grown colossally. Today at the press conference, interesting and productive dialogue took place between journalists and professional speakers on the most important and relevant issues today. I would like to wholeheartedly thank all the participants in the event for their commitment to their work and their longstanding contribution to our common cause.

SUBSOIL USE IN KAZAKHSTAN A pre-conference seminar took place on the eve of the KIOGE conference at the InterContinental Almaty – The Ankara in Kazakhstan hotel, with participation from leading legal professionals.

Grata Law Firm partnered the seminar. The firm’s representatives have participated actively in developing amendments and additions to the Law of the Republic of Kazakhstan on Subsoil and Subsoil Use.

The topical issues discussed included practical application of tax legislation, new types of provision of subsoil use rights, and implementation of the Subsoil Code project. The seminar included active audience participation in the form of a question and answer panel discussion.

RIXOS WELCOMES KIOGE 2013 A gala reception dedicated to the opening of KIOGE 2013 took place in a celebratory atmosphere in the Premium Ballroom of the stylish Rixos Almaty hotel on 1 October.

The irreplaceable host, Sanat Burakhanov, created an enjoyable and special atmosphere of celebration and relaxed socialising throughout the evening.

As is tradition, the organisers prepared a broad palette of music and dance for all those invited. The guests discovered the culture and customs of the Kazakh people and got into the spirit of the generous and hospitable land of Kazakhstan. The invitees were delighted with performances from the family duet Kayrat Iglikova and Zhuldyz Uskenbaeva, who performed famous global and domestic pop hits, and they also highly rated the quality of live performances from musical groups.

• The official part of the event includes exhibitor awards in the following categories:
• The Most Innovative Stand Design: Turbulentnost-DON and PenzTyazhPromArmatura
• The Best Corporate Stand Design: LAPP Group, Schneider Electric and RussNeft
• The Best Designed Stand: Maersk Oil, UZPA JSC and TransNeft
• Special Award for Participation - Haicheng Petroleum Machinery Manufacture Co., Ltd and Ministry of Industry and Innovation of the Nizhny Novgorod Region, Russian Federation
• The Best Newcomer» - EcoTec
  

Congratulations to the winners, and we wish everyone success in their work!

TRADITIONAL KAZAKH SOUNDS Following what is already a fine tradition, a cocktail party sponsored by Schlumberger, the largest oil service company, was held yesterday evening (2 October) at the RIXOS Almaty hotel to mark the start of the KIOGE 2013 conference.

Guests were presented with the best music of the Kazakhstani people. Leading artists of the republic entertained conference delegates throughout the evening, with the sounds of the kobyz, an ancient Kazakh stringed instrument, hypnotising those present. The Art-Dala musical magicians showed their performing talent by obtaining magical sounds from the Kazakh instrument and bringing them to a modern audience.

FMC Technologies, Priwody AUMA, Schlumberger, Tengizchevroil and Thomson Reuters were presented with commemorative medals for their longstanding cooperation with the conferences.

The Dostar music group concluded the evening. The conference will continue until 3 October at the Intercontinental Almaty hotel.

A COMFORTABLE GERMAN EVENING The evening of 2 October continued with a reception arranged by the General Consul of Germany in Almaty to mark the participation of German companies in KIOGE 2013.

An informal meeting with participation from representatives of the city administration, political and business circles of Kazakhstan, and potential partners of the German firms was held in the cosy ambience of the Augustin restaurant, designed as an authentic German home for gastronomes. The reception was opened by a greeting from Michael Grau to all guests, wishing them productive work and success in making useful contacts. In a relaxed atmosphere, businesspeople from Germany and guests from Kazakhstan discussed possibilities and prospects for cooperation.

German companies are participating in the annual KIOGE exhibition in Almaty by presenting a combined national stand. This year, the show welcomes 34 companies from the country.