Oil Industry In Kazakhstan Accounting Essay

Executive Summary

Oil and Gas industry has been a cardinal factor of Kazakhstan ‘s economical success supplying existent GDP growing above 9 per centum for the last 6 old ages. In order to keep that growing and efficiency energy companies runing on the oil abundant Kazak dirt needed to present an advanced engineering that would run into client demands systematically, cut down fabrication costs, and guarantee fulfilment with quality and safety criterions. The reply was the endeavor package -SAP ERP. Prior to the SAP ERP debut for the chemical makers at that place existed a immense spread between the endeavor and the workss. That disjunction prevented visibleness into operations and created inefficiencies that made it hard to set programs rapidly in response to alterations in client orders and production mix.

Additionally, information latency caused ill coordinated fabrication activities, provider and bringing holds, unneeded apparatuss, and inferior quality of merchandises and services, all of which contributed to a lessening in corporate public presentation.

The integrated package from SAP helped streamline company-wide fabrication processes – from be aftering and scheduling through executing to monitoring, analysis, and costing, besides bridge that spread by linking endeavors and workss.

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Oil Industry in Kazakhstan

“ Kazakhstan situated near the northeast part of the Caspian Sea and has got Sea ‘s good known oil Fieldss. Kazakhstan ‘s joint onshore and offshore proved hydrocarbon militias have been estimated between 9 and 29 billion barrels. The state late completed a reappraisal of its oil militias and estimations proven and likely oil modesty about 29 billion barrels. The appraisal of Kazakhstan ‘s oil militias which took topographic point in the 1990s was estimation of about 16 million barrels. Kazakhstan used to be one of the minor exporters during the 1990s, but it ‘s non any more. Kazakhstan is on the border of going one of the important participant in oil universe markets over the following few old ages ” Harmonizing to the beginnings from aboutKazahstan.com ( Source from official web site Of Republic of Kazakhstan, available at: hypertext transfer protocol: //aboutkazakhstan.com/Kazakhstan_Economy_Oil.shtml )

“ Kazakhstan produced about 1.22 million barrels per twenty-four hours ( bbl / vitamin D ) of oil in 2004 and consumed merely 224,000 barrels / vitamin D, ensuing in net exports of about 1 million barrel / d. Government of Kazakhstan expects to increase production degrees to around 3.5 million barrel / vitamin D in 2015. This would include about 1 million barrel / vitamin D from Kashagan, 700,000 barrel / vitamin D from Tengiz, 600,000 barrel / vitamin D of Kurmangazy and 500,000 barrel / vitamin D from Karachaganak. ”

Between the old ages of 1999 and 2004, the oil production of Republic of Kazakhstan rose by 15 per centum each twelvemonth, ensuing in about duplicating ( about ) of oil production. The latest information shows that first six months of 2005 showed a slower rate, 10 per centum of end product growing year-over-year. The slower gait of growing was due to authorities limitations on associated gas flaring or to new limitations on production sharing understandings. Oil production in Kazakhstan increased in recent old ages, which has been the consequence of an inflow of foreign investing in the oil sector of Kazakhstan. Kazakhstan hopes that most of the growing coming from four monolithic Fieldss as: Tengiz, Karachaganak, Kashagan and Kurmangazy. Harmonizing to the beginnings from aboutKazahstan.com ( Source from official web site Of Republic of Kazakhstan, available at: hypertext transfer protocol: //aboutkazakhstan.com/Kazakhstan_Economy_Oil.shtml )

The great figure of Kazakh ‘s oil is exported via grapevine through Russia and other adjacent states. Good connexion to the ports on the Black Sea and the Persian Gulf have allowed some Kazakhstan oil to be sold on the universe market. There are a tonss of attempts to be made in order to spread out the oil exports from the state to the Eastern states in the foreseeable hereafter as oil production additions in Kazakhstan. ( Glenn E. Curtis, erectile dysfunction. Kazakstan: A Country Study, available at: hypertext transfer protocol: //countrystudies.us/kazakstan/28.htm ) .

During independency in 1991, Kazakhstan has widened its oil sector to foreign companies in order to acquire more chances in investing and development experience. There are different types of international undertakings have formulate to the joint ventures with national oil company KazMunaiGas, every bit good as production sharing understandings and field geographic expedition and grants.

Karachaganak crude oil operation ( KPO ) .

In the north -west portion of Kazakhstan the topographic point called Karachaganak which is one of the universe ‘s largest gas and condensate Fieldss, Karachaganak Petroleum Operating ( KPO ) has been formed by BG Group, Eni, Chevron and Lukoil in order to spread out the geographic expedition of oil.

The Karachaganak field production began in 1984. Since the sign language of the concluding Production Sharing Agreement ( FPSA ) in 1997, the spouses of Karachaganak have made important investings in Wellss, installations and grapevines. Besides its size, Karachaganak presents operators with immense challenges due to extreme clime alterations ( + / – 40 grades Celsius ) and the duty to re-inject hard-hitting sour gas.
( Beginning available at BG Group ‘s web site:hypertext transfer protocol: //www.bg-group.com/OurBusiness/WhereWeOperate/Pages/Kazakhstan.aspx )

SAP ERP overview

The application which called the SAP ® ERP is the package foundation that big industries and medium sized companies have assurance to supply the best concern acumen and let operational excellence and invention towards new engineerings. By presenting this foundation, they can construct the flexible concern procedures which is critical at the present – and in the hereafter. SAP ERP is based on more than 35 old ages of experience with more than 43,000 clients worldwide. It provides powerful functionality, planetary orientation and flexible options for betterment bundle which companies need to obtain a sustainable competitory advantage and profitable growing place. Simultaneously, it supports automated, end-to-end procedures which are needed to exceed organisational barriers and extend concern procedures to spouses, providers and clients. ( Envision, Empowering Enterprise: hypertext transfer protocol: //www.envisionesl.com/products/sap_erp.html )

For the great figure of organisations, driving profitable growing in the concern clime today is non easy. They face the planetary competition, consolidation in the market, talent deficit, conformity demands, increased client and stockholder outlooks, and demands for greater profitableness. Changeless alterations in the industries merely compound these challenges. To run into these challenges, should be able to react and transform your concern rapidly, productively, without giving profitableness, transparence, or internal control. Companies need IT to be flexible, robust and secure. Solutions for endeavor resource planning ( ERP ) play a critical function in guaranting concern success. With the right ERP package, an Enterprise concern can hike public presentation while it is:

  • Easier to pull off complex corporate construction, selling channels and concern scenarios
  • Streamline concern procedures and operations
  • Optimize valuable resources of concerns and assets
  • Accelerate clip to market and clip to value
  • Provide individualised merchandises and services to bing and emerging markets
  • Improve employee and client service and satisfaction in all facets of concern

The chief grounds raising the demand for a new engineering.

Despite a entire fiscal growing KPO spouses experienced deficits in companies ‘ public presentation and end product rates. The nonsynchronous concern procedures and unequal usage of resources led them to operational inefficiencies, including increasing hazard of losing bringing marks and running operations at inordinate costs. The staccato systems between operational units caused highly high volume of the duplicated informations, invisibleness in fabrication activities and confusion among direction, works and procurement staff over supply and bringing. Additionally, the disjunction between the top-floor and shop-floor in existent clip were the chief factors in the impracticable production agendas, uneconomical activities, and inordinate stock lists – all of which contributed to higher operating and stock list costs. In the visible radiation of the heightened C dioxide pollution in the Karachaganak country chemical companies were bound to follow with quality and safety criterions, it required companies to utilize a new engineering that could cut down nursery emanations. The executives of the KPO companies faced the undermentioned issues:

  • Detached manufactured procedures and systems
  • Insufficiency of seeable industry operations
  • Operational ineffectualness from the direction
  • Not plenty controls to carry through with quality and safety criterions

Thankss to the integrated package and world-class services from SAP, they have found a solution to run into these challenges.

Change Readiness Assessment

The KPO direction decided to carry on a alteration preparedness appraisal in order to name employee willingness to accept the new SAP ERP package. The questionnaire comprised the 13 different inquiries. The bulk of the employees expressed an enthusiasm and positive attitude to the inquiries and the SAP ERP package in general.

Harmonizing to the study the staff under supervising remained advanced, independent, sometimes conservative and immune, but excepting the possibility of being apathetic. More than half of the employees agreed to see SAP execution as a benefit to the organisation, which would take to the consistent, efficient and robust fabrication procedures ; nevertheless there was an employee ‘s fright over utilizing the SAP package due to a deficiency of their cognition and expertness. In overall, the Change preparedness appraisal indicated the positive apprehension from the workers towards the debut and importance of the incorporate system for the better corporate public presentation and productiveness. Some proficient issues refering the employee operations were on the docket, however, could be eliminated through the equal preparation and attempts. The company squad demonstrated the right perceptual experience and preparedness for the important alteration within the organisation.

Corporate benefits from utilizing the SAP ERP

After the successful execution of the SAP ERP package it took a certain sum of clip and staff preparation in order to set and efficaciously utilize the new incorporate system. The KPO direction benefited from using the SAP merchandises throughout the company.

In the finance section the SAP ERP system automatized labour-intensive dealing. Having freed the skilled finance professionals from everyday activities enabled them to concentrate on the organisational issues. They identified the following touchable and intangible advantages from utilizing the SAP ERP:

  • Time and efficiency nest eggs
  • More effectual concern controls
  • More accurate/timely direction information
  • Better recovery of costs from JV spouses
  • Less trust on out of day of the month engineering
  • Powerful analytical/reporting capableness
  • Less duplication/reconciliation

The SAP ERP besides helped the HR directors align staff development to the organisational demands, acquire easier entree to the informations, cut down the cost of enlisting and extra informations.It allowed the HR section to be more proactive in the hiring procedure of bright and talented employees prior to their deficits in the organisation.

By holding streamlined the full fabrication procedure the SAP ERP provided the Product Development and Manufacturing section the undermentioned benefits:

  • Improved cost control through the incorporate direction of cardinal concern procedures across the organisation
  • Improved operational efficiency by widening the range of concern procedures throughout and beyond the endeavor
  • Accelerated response to market alterations and competitory challenges


Global competition, more demanding clients, and the demand to get the better of deficits in public presentation and end product rates- these forces were driving the KPO spouses to present higher-quality services and maintain an impressive growing. Unfortunately, the nonsynchronous concern procedures and unequal usage of resources were a hinderance on their manner to farther success and prosperity. The KPO spouses faced issues to run into client satisfaction, cut down fabrication costs and guarantee quality and safety criterions. Based on the scrupulous analysis the KPO executives chose to utilize the world-known merchandises and services from the SAP company.

The SAP ERP to the full integrated package fulfilled the KPO nucleus concern demands across all the endeavor sections.

It helped the company execute efficaciously and transparently its fiscal, human capital direction, procurance and logistics, merchandise development and fabrication, and gross revenues and services. Despite the initial troubles in the execution and acquisition of the SAP ERP package by the squad, in overall, the investing in the debut of the new system has proven worthwhile.


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  2. BG Group plc. ( 2010 ) , [ WWW ] . The article about: “ Karachaganak Petroleum Operation ” . Available from: hypertext transfer protocol: //www.bg-group.com/OurBusiness/WhereWeOperate/Pages/Kazakhstan.aspx
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