Tengizchevroil: social responsibility

Tengizchevroil (TCO) – joint Kazakh-American Corporation a leading exploration, development, production and marketing of petroleum and related products. The Tengizchevroil Company is the largest oil producer in Kazakhstan. Tengiz oil field in western Kazakhstan was opened in 1979 and is one of the deepest and largest oil fields in the world. In April of 1993 with the signing of an agreement between the Government of the Republic of Kazakhstan and the “Chevron” Corporation the Tengizchevroil has been created. Today, the stakeholders of the Tengizchevroil are: Chevron – 50%, KMG – 20%, ExxonMobil – 25%, and LukArco – 5%. The duration of an agreement is 40 years [1].

TCO highly respects the issue of a corporate social responsibility. Tengizchevroil appreciates the opportunity to carry out business in partnership with the Republic of Kazakhstan, guaranteeing that  any activity of the company meets the highest standards of ethics and social responsibility. “We strive to work so that the result of our work was a real improvement in people’s life [2]”.

Social Investments

The Social Investments Program (SIP) has been another initiation of TCO in the development of the social sphere in the region with an annual budget of $ 1 million dollars. As the result of recent organizational decisions, TCO improved social investments program, which meets the public and industry needs and goals. TCO  has   created   a  Council   on  Social   Investments,   which   consists   of  representatives   from different departments of the company, whose competence includes the distribution of the SIP budget. The Council also developed a philosophy and strategy of social investment, changing the vector from simple charity to target actions by which the urgent problems are resolved, and important social goals are achieved with priority to Atyrau region and TCO. The TCO aims to find direct connection and mutual  interest in specific projects for the public and its own production, moving in the direction of investments, and the tactical nature of the local social investments as part of the main activities of the company. This approach requires evaluation of the effectiveness of social projects by the method of evaluation of business projects, including development of a mechanism for monitoring and evaluating the effectiveness of investments. Recently  formulated  original points of this strategy allowed to review, improve and finally form the right philosophy of the program that helped to structure a specific activity. Thus, the priorities have been identified, priorities in education, supply  of drinking water, environmental protection, as well as the provision of quality health care.

Social Investments Program Strategy

After analyzing the initial stage of the quality of life of the locals, Council on Social Investments has developed a strategic line, through which the problems of its own industrial business are aligned with the company strategy in the socio-economic sphere and simultaneously oriented on the needs of the local people and improving their life style. As a result following basic principles of social investments and the main areas of activity have been identified:

The principles of social investments

  • Support local entrepreneurship and community in an ethical and social responsibility of business
  • The development of human, social and organizational factors and sustainable developments of local economies and living conditions for the local population without further assistance of TCO

The main areas of activity

  • Increase of the capacity of individuals or organization for the benefit of the society and TCO
  • Education, training and support of the socio-economic development of the region
  • Promotion of a healthy lifestyle, hygiene and sanitation, along with support for efforts to improve the quality of life
  • Environmental literacy and support for environmental initiatives
  • Basic human needs, in particular, the provision of quality water
  • Support of national language and culture

TCO agrees to continue to assist the people of the region in which it operates. The decisions taken and impro-vements are intended to more clearly define the main directions of social investments, emphasize the importance of the principle of partnership in the social sector and give  more  effective  planning, implementation and evaluation of social investment, applying to this field proven themselves mechanisms for managing the business.

The principle of partnership

TCO goes from philanthropic social investment model for the principle of partnership in the social sphere. Public-private partnerships – a form of joint participation, which brings together the business of local enterprises, government, non-state organizations and local businesses through the distribution of roles, responsibilities, and the final formulation of the desired goals. By entering into such partnerships, the participants can work together to plan, to use the common resources at their disposal, share the risk and the  success of the common cause. Partnerships can build social equity and potential. But most importantly - the joint efforts of public-private partnerships have a higher chance to offer concrete and effective, designed for many years to solve problems solutions, allowing overall beneficial effect on the socio-economic situation of the region.

TCO seeks to establish a direct relationship between social investment and the business of their  own, moving in the direction from tactical investments and of the local nature, to social investments as part of the main activi-ties of the company. This leads to a new approach to assessing the prospects and the mechanism of realization of social projects with the use of corporate methods of business-projects, namely, the principle of competition in selecting the key players, evaluation of the applicants for grants, long-term planning of the budgetary expenditure, performance monitoring, and evaluation of the effectiveness of investments in basic indicators.

Evaluating the effectiveness of investments at baseline

Adopting a new system in TCO, monitoring, evaluation and reporting of investments in social projects is designed to provide maximum return on investments for the benefit of the beneficiary community, ie.recipient and also to observe their own interests and objectives. Monitoring involves systematic data collection on specific indi-cators of the performance of the project, as well as the necessary information within certain time intervals to deter-mine how well the project is developing and how the partner is coping with it. Evaluation work includes systema-tic, objectivity and the transparency of the partner work on a certain project, results and effectiveness of invest-ments and effort to certain time period. In connection to this it is required to send reports with a certain interval, reflecting objective measures, the degree of completion of the work, problems, successes and lessons learned.

As an example of corporate responsibility in Atyaru region TCO implements social program  called  “Egilik” that translated from Kazakh as “wealth”.

Egilik

At the start of Tengizchevroil joint venture in 1993, the company created a five-year, $50 million dollar program called Atyrau Bonus Fund. At that time, TCO developed a tradition of working collaboratively with the Atyrau  Oblast Akimat leadership to choose social infrastructure projects in Atyrau Oblast to be funded  with Tengizchevroil funds.

In 1999, TCO developed the voluntary Egilik (Kazakh for benefit) program to succeed the Atyrau Bonus program. It began in the year 2000 with a $4 million budget, growing steadily until 2003 when the budget was increased to $8 million for three years and then again increased to $12 million for another three year period.

Today, the budget is $20 million per year. The majority of funds are currently dedicated to replacing the water system in Kulsary, the nearest population center to the Tengiz field and home to many TCO employees and contractors. This project will take three years and compliments one of the TCO Community Investment Program key focus areas; health. TCO health and social impact assessment studies of the region have sited that Kulsary water quality is low and water service undependable. In 2008, Tengizchevroil was bestowed the Silver Paryz Award for another Egilik project in Kulsary, the vocational school built to educate the future of the oil industry.

Over the life of the program, TCO has funded various social infrastructure projects for Atyrau Oblast including schools, hospitals and clinics, as well as the construction of water, electricity and water systems. By the end of 2011, TCO have invested $185 million in the Egilik and Atyrau Bonus programs since 1993.

 

 

  1. Wikipedia materials on Mangistau region wikipedia.org.
  2. Official “Tengizchevroil” site tengizchevroil.com.
Year: 2012
City: Almaty