Oil companies spend about $10 billion annually on the purchase of goods, works, and services (GWS), but approximately half of this money goes abroad, as foreign firms prefer to work with overseas suppliers. Companies find ways to circumvent local content requirements by using shell companies, which is possible due to the shortcomings of Kazakhstan's legislation. As a result, the share of actual Kazakh content turns out to be significantly lower than the official data, as experts from Exclusive.kz have found.
Every year, subsoil users engaged in hydrocarbon extraction allocate about $10 billion for the purchase of goods and services. However, a significant portion of this money, on average 50%, goes abroad, as foreign companies prefer to purchase GWS from overseas suppliers. They use various schemes to bypass local content requirements by creating shell companies. Shortcomings in Kazakhstan's legislation allow them to do this, leading to the actual indicators of Kazakh content being significantly lower than the official data.
On February 12, members of the Committee on Ecology and Natural Resource Management heard reports from oil companies "SNPs-Aktobemunaigas," "Buzachi Operating," "Maten Petroleum," and "KoZhaN" on increasing the share of Kazakh content in their purchases. All these companies have shareholders from China.
Chinese companies account for about 15% of the total oil production in Kazakhstan, with the largest share being "SNPs-Aktobemunaigas," which develops the Zhanazhol field and produces 5-6 million tons of oil annually, not counting natural gas volumes.
According to the Deputy Minister of Energy Erlan Akbarov, in 2025, oil companies in Kazakhstan plan to purchase goods, works, and services worth 4.6 trillion tenge (about $9.3 billion), of which just over 3 trillion tenge ($6.1 billion) will be directed to Kazakh suppliers, accounting for 65% of the total amount. Four of these companies spent a total of 231 billion tenge on GWS, with the local content share amounting to 173 billion tenge, or 74.8%.
Purchases through shell companies
According to Akbarov, "Maten Petroleum" allocated about 9 billion tenge for Kazakh content. In particular, 99.6% of the gasoline and diesel fuel purchased by the company was produced in Kazakhstan, 73% of well deep pumps, 56.1% of personal protective equipment (PPE), approximately 52% of casing and pump-compressor pipes, and 50.1% of chemical products.
At the same time, the Ministry of Energy estimates the potential volume of import substitution and additional localization of goods at 1.2 billion tenge.
The company "SNPs-Aktobemunaigas" directed 113.6 billion tenge to Kazakh GWS, which accounts for almost 73% of the total volume of purchases. The share of local content in the purchase of goods was 20-25%, services – 43-51%, and works – 88-93%.
Moreover, the ministry believes that due to the localization of goods, the total amount of purchases could increase by 29.5 billion tenge. The main reserves for localization are concentrated in the procurement of electrical equipment, valves, filters, drilling and compressor equipment, as well as measuring instruments and bearings. According to the ministry, Kazakh producers are insufficiently involved in the purchases of "SNPs-Aktobemunaigas."
Thus, Chinese companies mainly use Kazakh suppliers for services, while goods are more often imported from abroad. However, even this data may be distorted. It has become known that Chinese companies often purchase GWS through shell structures, so-called "intermediaries," which may be registered in Kazakhstan and have Kazakh names but are actually owned by Chinese corporations. This was reported by deputy Edil Zhanbyrshin, citing information from market participants.
It is important to note that such schemes to bypass local content are found not only among Chinese companies but also among other foreign participants working on the Tengiz, Kashagan, and Karachaganak projects.
Oil and gas expert and director of the Energy Monitor Public Foundation Nurlan Zhumagulov emphasizes the need to change existing rules by introducing legislative amendments. He notes that the Code "On Subsoil and Subsoil Use" lacks a clear definition of the status of a Kazakh producer.
There is no unambiguous interpretation of the status of a Kazakh producer. Any foreign company can register a limited liability partnership with 95% of employees being Kazakhs, which is enough for it to be recognized as Kazakh, while foreign shareholders and profit repatriation are not taken into account.
Data exists, but trust is lacking
Experts believe that foreign suppliers should create joint ventures with Kazakh partners (50/50), share experience and technologies, and also localize production. In practice, however, such initiatives are either absent or represent only formal projects that have no real significance.
This practice is characteristic not only of projects involving Chinese investors. However, unlike participants in the Tengiz, Kashagan, and Karachaganak projects, Chinese companies are characterized by a high degree of opacity.
The chairman of the Kazakhstan Oil and Gas Council PetroCouncil Asylbek Dzhakiev emphasizes that "SNPs-Aktobemunaigas" is the most closed company: it does not respond to calls to organize meetings with Kazakh suppliers to ascertain their needs.
"Today they provided information, but whether it corresponds to reality, no one knows," comments the expert representing the interests of 160 oil service supplier companies.
He also noted that unlike TCO, NCOC, and KPO, the operator of the Zhanazhol field does not publish its procurement plans in the public domain. As a result, neither the procurement procedures nor the list of goods and services are known. The last meeting with the business community took place back in 2018, indicating a long absence of dialogue.
Furthermore, it has become known that some Chinese oil companies do not even have their own websites. An interesting dialogue took place on this topic between deputy Zhanbyrshin and representatives of Chinese companies.
"China ranks first in the field of information technology, but Chinese companies do not have functioning websites – this is nonsense. President Kassym-Jomart Tokayev emphasizes China's achievements in artificial intelligence and digitalization. Yet our Chinese companies cannot ensure the operation of their web resources. This raises questions. I propose to send a letter to the Chinese embassy to draw their attention to the situation with the websites of our Chinese partners," said the deputy.
The deputy also inquired of Liu Jincheng, the general director of "Maten Petroleum," about the reason for the company's website being non-functional. In response, he explained that "Maten Petroleum" is a small company with annual production volumes of about 300,000 tons of oil.
"This is not an excuse. Even small companies have social media pages. You are an oil company with billion-dollar purchases; you must have a website and transparent procurement procedures. Otherwise, how will we learn about your business?" said the member of parliament, demanding that oil companies create websites and publish their procurement plans on them within two weeks, promising to check compliance with this requirement.
