Industry Task Force Terms of Reference

1.   General Provision

Terms of Reference are to provide a mechanism to unify the individual Local Content development endeavours of operators, investors and agencies, to allow for the exchange of data and the development of new initiatives with achievable, sustainable outcomes and timescales.

2.   Background

2.1 Whilst current individual local content programmes continue to make progress and with the full recognition of the rights of operators and investors to develop their own strategies and programmes, a Task Force will enable a greater sharing of knowledge and a better coordination of effort  to  accelerate outcomes toward a common goal; to grow a domestic supply chain and contribute to long term sustainable employment that will make a substantive contribution to both Kazakhstan and hydrocarbon delivery globally.  

3.   Task Force Objectives

3.1 Task Force bring together, operators, investors, government and industry stakeholders to share knowledge and create strategies for initiatives that will accelerate the progress of sustainable localization and local content. 

3.2 Task Force to improve the coordination of local content, based on shared understanding of challenges and vision to support the growth a strong and vibrant future for Kazakhstan’s oil and gas sector.

4.   Function

4.1 Task Force to provide focus and forum to ensure effective and efficient delivery of two main functions: 1) the exchange of non-sensitive and non-confidential data related to localization and local content sustainability 2) scoping strategies for new initiatives to progress local content development in Kazakhstan, complimenting and contributing additional value to individual localization and local content efforts of operators, investors, agencies and industry.

5.   Task Force Membership and Relationship to Stakeholders

5.1 Recognizing the complex nature of the delivery of local content strategies that requires close cooperation and alignment between all sides of industry - operators, investors, associations and suppliers and Republic of Kazakhstan (“ROK”) government departments, Task Force membership will be drawn from operator signatories to the ‘Aktau Declaration of joint actions’ together with investor companies.

5.2 The operator Task Force are drawn from:

  • Karachaganak Operating Company B.V. (“KPO”)
  • JSC NC “KazMunaiGas” (KMG)
  • North Caspian Operating Company BV (“NCOC”)
  • Tengizchevroil LLP (“TCO”)

Initial Investor Task Force members are drawn from:

  • Shell Kazakhstan Development B V 
  • BG Kazakhstan

In consideration of the sustainability of Task Force as a contributing body to Kazakhstan’s local content efforts, additional government departments, operator and investor companies may be invited to join Task Force by mutual agreement of existing Task Force members.

5.3 Task Force will agree a strategy and the content of a forward engagement plan with Republic of Kazakhstan ministries, regulatory authorities, and industry bodies concerned with local content development and delivery.

5.4 Task Force will consider the strategy, content and current activities of main contractors and equipment manufacturers in addition to national trade representative bodies and encourage a coordinated approach.

6.   Task Force Organisation and Control

6.1 Task Force membership will ensure effective coordinated working practices. Task Force may elect to form sub-working groups headed by specific members to undertake agreed nominated tasks. Such working groups could include additional Task Force members to facilitate the engagement of agreed stakeholders.

6.2 Task Force members may also be responsible for channelling the contribution from other sources of expertise, knowledge and experience to enhance communication and broaden stakeholder support.

6.3 Task Force members will have knowledge and experience of local content development in Kazakhstan and have access and contribute non-confidential project demand and supply chain capacity related data from parent organisations.

6.4 Task Force will be established using “volunteer” principles. Each Task Force member will be supported by the resources of their own parent organisation. The first line of resource to conduct work programmes identified through the activities of Task Force will be the members themselves and their parent organisations.

6.5 Should external resources be required to undertake specific scopes of work, Task Force will consider setting up or using an appropriate legal entity that will act as the contracting party. The need for additional funding will be supported by a formal business case and additional funding sought from within membership parent organisations (acknowledging applicable governing PSA constraints as appropriate) and if appropriate from external organisations. Such funds could be required to undertake tasks such as appointing consultants to establish a common demand/ supply gap model, conducting further research on the supply chain companies to establish a “capacity register” and setting up additional support for local company / enterprise development.

6.6 Task Force members will be nominated to manage the delivery of specific tasks including: the selection process for the appointment of third parties, expenditure allocation, budget control, schedule and quality of output. Clear milestones and targets for specific tasks, including data exchange and initiative outcomes will be set in a way which can be tracked and progress monitored.

6.7 The outcomes and findings of all new strategies and initiatives collectively instigated through the activities of Task Force will be shared by all member parent organisations and may also be disseminated to additional stake holders, with the collective approval of Task Force.

6.8 Task Force will appoint a rotational Chairman to chair the Task Force and attend Task Force meetings.

6.9 Task Force will meet formally not less than 4 times per year. It will establish clear milestones and targets for specific tasks including data exchange and initiative outcomes, to occur between Task Force meetings in a way which can be tracked and progress monitored.

6.10       A Coordinating Secretariat will be responsible to support the efficient working of Task Force. More substantive scopes of work can either be delegated to Task Force member companies or by mutual consent of Task Force to a third party resource with the relevant expertise. All those involved in performing functions to Task Force will adhere to these Terms of Reference.

Specific areas of Secretariat contribution include:

  • to generally support the endeavours of Task Force
  • to serve as a coordinating unit to assist in delivery of the Blue Print and implementation of LLCD
  • to provide consistently accurate, timely and useful information and data to Task Force
  • to undertake preparatory tasks to support the efficient working of Task Force
  • to prepare agenda papers in consultation with Task Force and prepare outcome reports
  • to be responsible for liaising with and between Task Force members
  • to arrange Task Force meetings

6.11 Task Force and its members recognise and will observe all relevant (international) anti-trust and competition laws and all other applicable laws and regulations when participating in Task Force (including applicable PSA requirements), being sensitive to the fact that members may be competitors. Task Force members will not discuss externally competitively sensitive matters, most notably prices, production, inventory costs, future business plans and matters relating to individual customers, vendors and suppliers.

6.12 Task Force will adopt a Communication Protocol for the governance of internal and external communication to include the following principles:

  • All internal communication between Task Force members will be conducted within the parameters of the acceptable disclosure (of data, advice and opinion) of individual task force members.
  • All external communication, whether written or verbal, with any organisation or individual not represented within the Task Force membership will not be permitted without prior approval of Task Force members.

6.13 A review of Task Force will be undertaken periodically and adjustments recommended to enhance operating practises and performance including the coordinating role and its status as a volunteer based organisation.

7.0       KLCD themes and Action Plan

7.1       The following themes have been agreed by the Task Force for inclusion within a KLCD Blue Print (Task Force reference document).

7.2       Task Force will review each theme and consider ideas, strategies to develop an action plan with specific outcomes and time scales defined:

  • Development of Services Sector; Task Force will consider current challenges and forthcoming opportunities for the development of Kazakhstan’s Services industries as part of a strategy to develop greater indigenous capability in the sector; these activities to include attracting cooperation agreements with technology transfer by companies in the global oil and gas supply
  • Development of Manufacturing Sector; Task Force will consider current challenges and forthcoming opportunities for the development of Kazakhstan’s Manufacturing industries as part of a strategy to develop greater indigenous capability in the sector; these activities to include attracting cooperation agreements with technology transfer by companies in the global oil and gas supply
  • Kazakhstan Industrial Capacity Register; as a source of reference to identify current and potential capacity in the oil & gas sector and non-oil & gas sector. Task Force will aim to understand the on-going work of RoK government agencies in this area and with reference to best industry practice consider how these efforts could be assisted. 
  • Standards, Tendering Processes, Specifications, Code of Practice, Health & Safety; Task Force will consider how harmonisation can be linked to a Code of Practice
  • Training, Skills, Human Resource Development; Task Force will assemble available information on the programmes underway in Kazakhstan, develop a collective understanding and identify strategies to accelerate progress
  • Research and Development; Task Force to make a strong connection to current R&D programmes that are taking place in the oil & gas sector within the Republic of Kazakhstan and to identify additional opportunities in that effort.
  • Enterprise Development and Inward Investment Programme; Task Force to utilise the current work already initiated by Contracts and Procurement Committee (target market opportunities) to consider strategies to stimulate the Promotion, Growth and New Development of local companies with best practice examples to be reviewed. Task Force will use its knowledge and examples of best practice to consider how this might contribute to Kazakhstan’s on-going efforts to promote inward investment in the oil & gas sector.

8.   Preparatory Activities

Gap Analysis

8.1 Task Force members will comment on a gap analysis to allow scenarios to be developed for longer term local content strategy planning whilst preserving confidential/ sensitive information

8.2 A priority for Task Force will be the preparation of a comprehensive and clear view of project demand and supply as the basis for scenario planning and new local content development initiatives.

8.3 Recognising that the timing and expenditure commitments for Capex and Opex are subject to the boundaries of operator confidentiality, supply demand modelling will be considered to band projects in terms of future expenditure levels and utilising a breakdown of critical categories for resources (human resources, equipment and materials).

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