Corporative management of oil and gas production (international experience)

Purpose – To consider the principles of formation the system of Kazakhstan model of corporate management in conditions of integration in the world market economy.

Methodology – During research have been used analysis and synthesis methods, methods of learning of international models of corporate management experience etc.

Originality / value – First time realization of the basic ideas of application principles of corporate management considered an example of joint stock Company National Companies "KazMunayGas" (KazMG) -Kazakhstan.

Findings – According to research results, joint-stock company "KazMunayGas", has taken into account all recommendations Standard and Poor ` s and has developed the Plan of measures on elimination of remarks and recommendations. In addition, there is senselessly and dangerous direct and automatic transferring of foreign models of corporate management system into Kazakhstan of oil and gas production management. There is the contradiction in sphere of corporate relations are traditionally sharpest in the Kazakhstan conditions. Because of a mass privatization in Kazakhstan, there was an original structure of the capital of the joint-stock companies, based on distribution of fine shareholdings among the big amount of fine shareholders. Therefore there is should increase of a regulating role of the state. 

Introduction

Efficiency of a modern social product determined by density of a stream of inventions of new products and new technologies. The commercial enterprises, state and public institutions and the organizations start to operate in a new way in these conditions. There are as far as widely and productively used knowledge is determined the future of humankind. As is known from raw material, spare parts and energy under influence of workers the added value cost of new product is created in epoch of industrial development. Today knowledge, new innovative products, new innovative technologies, new high skill, new relations with consumers create added value cost product. The knowledge becomes dominant means of achievement of social and economic results in XXI c. [1-6].

By the realization of the State program of the forced industrial-innovative development of "КаzMG" Kazakhstan are used the principles of international corporate management of oil-and-gas production.

Models of corporate management

The model of corporate management is a control system of the certain type, which represents the certain structure of management of joint-stock company with the special interrelations, the certain accountability in which the certain list of powers and the responsibility is embodied. Anglo-American models of corporate management is typically for such countries as USA, Great Britain, Australia, Canada and New Zealand. Directly, the name of the given model does not concern to relationship of cultures and customs, and ancient Anglo-American relations, which developed in during many centuries. Features of the given model are the following:

• A plenty of owners of the share capital as it still name, dispersion of the share capital. That is, for any corporation in USA, the Great Britain and of some the appropriate countries typically a plenty of fine shareholders – absence in corporation of dominant Thus, even in the largest corporations of the listed countries large the shareholders owning of 2-5 % of shares are considered.
• The board of corporation is a joint body which consists only of employees of corporation and which all members, basically, have equal The board is engaged in questions of election of the general manager, together with daily problems of functioning of the company. As it is impossible to forget, that the companies which have chosen such strategy, expect for work in the foreign markets. Therefore, any domestic companies, which want to go on such way of development, should train the personnel in the English language.
• Key figure of the common managerial process by a society frequently is the top manager who makes all-important decisions during activity. In comparison with other countries in USA, there are most strict rules of disclosing of the information as the precise and settled system of relations between shareholders operates.
• Corporations are obliged to give about themselves a lot of the information on the financial reporting, payment of wages to the manager structure, the share of actions are in their possession. Particularizes information about shareholders with 5 % and more share capital from the common, including the information on their last places of work, the name of the companies, which carry out auditor check etc.

This information is included in to insiders usually carry executive directors or Topmanagers. Outsiders are the certain persons or firms who have no the direct relation to corporation, have no as well personal interests in the company. Usually, to outsiders carry specially invited persons or the organizations for performance of the certain important functions. The board of corporation is a joint organ which consists only of employees of corporation and which all members, basically, have equal rights. The board is engaged in questions of election of the general manager, together with daily problems of functioning of the company. As it is not possible to forget that the companies which have chosen such strategy expect for work in the foreign markets. Therefore any domestic companies which want to go on such way of development due to train the personnel in language as a minimum to recommend the English. A key figure of the managerial process by the company frequently is the general manager who makes all important decisions during activity. In comparison with other countries in USA there are most strict rules of disclosing of the information as between shareholders the precise and settled system of relations operates. In USA according to the legislation it is necessary to submit to the appropriate organs quarterly and annual reports from the full covered information on their activity. In the Great Britain it is necessary to make two times per one year. All corporations are obliged to operate according to requirements of the current legislation of that country where they are and function. In USA owners of shares of the certain corporations have no behind themselves the right to vote on a rate of commission, in the Great Britain the given question is taken out on voting. At all not being the outstanding expert in sphere of economy, the many people is known with loud names of successful American corporations, already during ten years do not disappear from the market. So, undoubtedly the Anglo-American model of corporate management can be named more than effective. As, observing rules of the given concept, we in practice can be convinced of successful result of achievement of the purposes which put before a managers of the companies, by the direct observance of canons of the mechanism of functioning of the given model.

To lacks it was necessary to relate the certain riskiness which owners of shares is carried in connection with absence of an opportunity to operate the current condition of activity of corporation, and also in the Anglo-American model there is certain "bifurcation" of cost of shares on real and fictitious, and also probable growth of market cost of shares, that frequently results to exchange crises [3].

The continental model of management.

The inclusion in corporation of all interested groups is typical prevails in continental Europe model: shareholders, financial structures, employers of the state etc. all of them are perceived as a part of corporate structure and have the certain rights on management. There is the principle of social partnership lays in its basis. It is obvious, that interests of all participants are various, but all of them are interested in successful activity of corporations. The social partnership is historically fixed in structures of management by corporations and in the laws regulating economic activities in many European countries. In the continental model shareholders are only one of the interested groups that is basic difference from Anglo-American model. 

Basic elements of the continental model:

• two-level structure of board of directors;
• Representation of the interested parties;
• Universal banks;
• Cross possession of

As against Anglo-American model the board of directors in the continental model consists of two organs administrative and observant (supervisory) councils. Into administrative council usually enter about 10-15 members, each of which is responsible for any direction of activity of corporation. Administrative council is an original collective general director of corporation.

The supervisory council serves as the basic mechanism of realization of a principle of social interaction in corporation. As against the Japanese or American corporations number of the supervisory council is established by the law, instead of the charter of corporation. That fact, that in the supervisory council do not enter insiders, at all does not mean that outsiders enter into it only.

Members of the supervisory council elected by shareholders, usually they are representatives of banks and corporations The analysis of activity of board of directors allows to assume, that the main task of system of representations in this organ is not protection of interests of any one group of investors, and a recognition of an overall aim of all accomplices of corporation i.e. maintenance of its balanced activity and increase of its competitiveness.

The ideological essence of the given model consists in aspiration of achievement of the public coordination, balance of interests. Distinctive feature of continental model is active participation of banks in during corporate management. Commercial banks are shareholders of corporations. Banks also can act in a depositary role and play an essential role during voting by proxy. Commercial banks are universal and render a various sort of service to corporations: crediting, broker and consulting services. They simultaneously can carry out a role of investment bank, carrying out all works connected to issue of shares. Usually the bank is submitted in the supervisory council and is the qualified expert for corporation.

Granting of a wide spectrum of services the usual shareholder allows commercial banks to collect about the clients the information in considerably more full volume, than. The ample opportunities thus are created to use the internal information on a state of affairs in corporation, including about manipulations with actions (shares). However according to the European tradition banks bear (carry) not only financial, but also a moral responsibility for effective functioning of corporations. Therefore banks in every possible way try to help the corporations which have got in a heavy financial position. For this purpose special funds are created, banks actively participate in restructuring corporations. Participation of banks in activity of the supervisory councils widely practices. For corporations issue of shares till now is not the basic source of means for monetary funds they resort to services of banks for external financing. In result shareholders show considerably smaller interest to activity of the share market.

Other distinctive feature of continental model – a role of the state. Corporations are closely connected to the state which frequently owns significant share holdings and has the representatives in their boards. In turn, the state stimulates and supports coordination between corporations within the framework of separate branches. The similar mechanism does not exist in Anglo-American model.

Within the framework of continental model cross possession of shares that allows the companies to cooperate with each other by means of mechanisms of corporate management is widely distributed. The special place among the countries which have accepted the given model is occupied with Germany. So, the given model name is Germany [4, 7-9].

The Japanese model of corporate management. The heightened interest of the world causes the Japanese management. Its research demands acceptance in attention of three major factors determining and forming methods of management by the Japanese firms:

• Fundamental principles of management.
• Mechanisms, rules by means of which these principles are embodied in life.
• The third factor is social and cultural specificity of the country, historical traditions, a condition of public consciousness, national 

Basic principles of the Japanese type of management (the first factor) can be related to four groups:

• The first is a crossing interests and spheres of live ability of corporations and workers: a high degree of dependence of the worker from the corporation, granting to him of significant social guarantees and the blessings in exchange for fidelity to firm and readiness to go on victims in a name of its
• The second group of principles is possible to formulate as priorities of the collectivist beginning before individualism, all-round encouragement of cooperation of people inside firm, in particular, within the framework of a different sort of small groups, an atmosphere of equality between workers irrespective of occupied posts.
• The third group skillfully supported balance of influence and interests of three basic forces providing functioning of firm: managers, workers and
• To the fourth group it is possible to relate a way of formation of various connections between firms business partners, first including between suppliers and buyers of

The board of directors and a structure of the managerial process in the Japanese companies coincide with the American managerial process. However, the mentality of Japanese people stakes on other aspects in a management efficiency, than in America.

In management of corporation the Japanese managers give the basic attention the organization of work. The Japanese firms have no rigid classification of posts with the fixed rates of the salary on each of them. Duties between people strictly are not distributed; performance of various kinds of work is encouraged at flexible interaction of workers depending on a concrete situation.

Earnings are defined on the basis of an individual estimation of activity of the worker by many criteria.

Growth of the salary with a length of service is one of important making these systems.

Other criteria reflect the labor contribution, successes and diligence to training and improvement of professional skill, to work in collective etc. The big value the assessment of works the direct head has skill. In this respect the Japanese model essentially differs from western where rates of the salary by each kind of work, posts, and qualifications develop mainly under influence of a supply and demand on a labor market.

Training and preparation of the personnel in Japan, as a rule, is carried out inside firm, more often on the job. One of the major purposes is development of various skills and abilities necessary for the given firm. Promotion is carried out stage by stage, in view of a length of service, on complex system of criteria and at the wide not formalized consultations of workers of firm.

Managers, including topmanagers are basically workers of the given firm, past all or the majority of steps inside corporate hierarchy. Members of board in the majority are the head the certain industrial sites of the company. Paramount value in the Japanese firms is given to the control and management direct in shop, on an industrial site.

Workers carry out operations as standard, non-standard: readjustment, revealing and elimination of the reasons of faults, the control above quality of production. The western model of management assumes performance of non-standard operations by experts. The special attention is given that knowledge, experience, ideas of industrial workers were constantly transferred in the divisions engaged R&D. Stimulation of group work and cooperation. Appear also every possible small, naturally arisen group, which activity is aimed at perfection of manufacture. All workers carry identical working clothes; use the same parking for automobiles, dining rooms etc.

Hiring and working conditions. For work graduates of high schools and special technical schools who as it is supposed, will work in firm long term, in an ideal all labor life are accepted mainly. In the western model hiring on a labor market prevails at much greater mobility of a labor. The corporation provides with the employee habitation, payment 'if a significant part of charges on health services, transport charges, the organization of collective rest, sports actions. The third factor – social-cultural environment in Japan renders basic influence on all kinds of human activity, including economic. From three allocated factors determining character of the Japanese type of management, in the greatest measure to other countries, to other social and economic and social-cultural environment is applicable the first, including basic principles of management.

Efficiency of the Japanese management evidently proves to be true positions of Japan in the world market. The overall performance depends on action of the human factor: an objective self-estimation of the worker and trust of the manager to him. 

It is possible to allocate also the following features of management in the Japanese firms: at transition to output more complex and technically improved products there is a decrease of technical, technological and organizational complexity of their manufacturing. At the general orientation to increase of a level of automation, it considered important in the maximal degree to simplify and rationalize works of industrial divisions based on careful technological and design preparation of manufacture. A group of experts, which under the management of specialists cooperate with each other in the Japanese firms, will usually carry out development of the new goods. Here process of development of the new goods is the special tool, which helps to learn to think in categories of firm as a whole [10-11].

Features of the Russian practice of corporate management.

The term « corporate management » was included in a lexicon of the Russian companies at the end of 1990th. It first of all is connected to development of the Russian market, its integration in global, with growth of interest of foreign investors to the Russian companies. The Russian companies and investors start to understand, that an important part of capitalization non-material actives, but not make technologies, a knowhow etc., and the usual systems of mutual relation of proprietors and management, a degree of maturity of process of strategic management, ways of the prevention and the sanction of corporate conflicts. All this is reputational component of the company. Allocate the following features of the Russian system of corporate management:

Concentration of the property. In spite of the fact that in the beginning of 1990th as a result of a privatization be relative dispersed structure of the property was generated, she it had formal character and has existed not for long. Now the majority of the Russian joint-stock companies are in hands of one or several large shareholders. Such situation is characteristic first of all for sector of natural resources, for example for petroleum branch, but it also is observed and in sphere of communication, in the metallurgical and wood industry. Various researches of structure of the property in the Russian joint-stock companies give unequal concrete figures though as a whole conclusions coincide: the basic dominant. Group having both the greatest share, and the best opportunities for the control, is management of the companies. Analyzing the received data, experts mark, that for the period, past from the beginning of a privatization, managers have essentially increased the share in structure of the property of the Russian companies. The steady tendency of reduction of a share of ordinary workers in the capital of the companies is marked. It is connected both to sale of shares, and with the termination by many of them of labor relations with the companies, hence, transition in other categories of shareholders. Other major tendency is the increase of a share of external shareholders (outsiders), the physical and legal persons who earlier have been not connected to those companies, which shareholders they become. It is connected to development of the Russian stock Exchange market, pre-crisis boom IPO (initial public accommodation of shares) the Russian companies on domestic stock exchanges and abroad, and also with development of practice of" private accommodations » (sales of shareholdings outside of the share market to the limited circle of investors). Before crisis all experts marked reduction of a share of the state, crisis has a little modified this tendency because the state at various levels of authority was included in authorized capitals of the companies and banks which have received the state help, but could not overcome a consequence of crisis. The state does not lose the positions of the dominant shareholder of the largest Russian companies of real and financial sector ( Russion Rial Way -RRW, Gazprom, RossNeft, the Savings Bank etc.). The state not only supervises manufacture of a powerful part of gross national product, but also has turned to the largest investor in the share market. Research of experts of the higher School of economy has confirmed the highest degree of concentration of the property on representative sample. A high level of concentration of the capital (presence of the shareholder having a package over 50 %) 70 % of the surveyed joint-stock companies had almost. Set of the enterprises with an average level of concentration of the property (at the largest shareholder of a shareholding over 25 % and up to 50 %) has made presence about 18 %. Only 13 % of sample concern to other societies with low to the Russian measures a level of concentration. High concentration of the capital and presence of large shareholders determine such feature of the Russian practice of corporate management, as insufficient attention to rights shareholders.

Insufficient differentiation of functions of the property and the control. Many large shareholders also are general directors of joint-stock companies and (or) enter into board of For such companies typically absence of the accountability and mechanisms of the control (majority and supervising shareholders carry out the control of management), a low level of disclosing of the information. As it was already marked, in a basis of corporate management the concept of the agency conflict, consequence of division of functions of the property and management lays.

• Feature of the Russian practice is that as a matter of fact for division of functions of the property and management time has not come yet on the middle and small business as the most part of the companies are at those stages of life cycle which mean absolute monarchy of the proprietor. It is connected to comparative youth of the Russian business. It only approaches to stages to which management will be transferred in hands of the hired managers who have been not connected to the companies by relations of the property. It causes also weakness of the majority of the Russian boards of directors, indistinct differentiation of powers of controls of the companies, intervention of proprietors in all aspects of activity of their business.
• The high Level of opacity of structure of the property of the Russian To the Russian practice of corporate management rather low level of disclosing of the information and a transparency of business also is peculiar. The concept is " relatively” entered to show the certain tendencies in this area which testify to increase of a level of disclosing of the information for the last few years that is connected to development of the legislation in the field of disclosing the information, plenty IPO and increase of culture of observance of principles of corporate management by the companies. Annual researches of a transparency of the Russian companies which will carry out international rating agency Standard & Poor’s testify to it. One of the reasons low in comparison with foreign practice of a level of disclosing of the information is such feature, as a high level of corporate captures and unfriendly absorption. Fear raiders attacks are the reason of unwillingness of the companies to open the information on. Large business groups in the form of holdings supervise many sectors of the Russian economy. Cross possession of shares and other scheme, providing opacity of structure of the property are characterized for them.

At the same time the Russian market undergoes the changes caused by its integration in world. Till 2008 plenty IPO was marked in the Russian companies. Only in 2005 was held 13 IPO, it was involved $4, 5 billion, from them of 94 % means of foreign investors. Development of the Russian Stock Exchange market and an exit of the companies on the foreign financial markets push them to revision of practice of corporate management aside on increase of trust of external investors.

There are some major factors, pushing the Russian companies to an exit on IPO:

• economic growth and an amplifying competition;
• aspiration of the companies to involve investment assets;
• dearness of the internal bank credit;
• desire of proprietors of the companies to increase capitalization, including for preparation of the company for the subsequent sale.

Today for the further development of business it is necessary for many companies to enter new manufactures and to modernize existing, that derivate the increase demand for the capital. It entails demand for "long" money (for the term of from 5 years) and under much smaller interest, than today it is offered by domestic bank system (i.e. under 5-6 % annual against 12-14 % available on the market).

Not satisfaction demand for the capital could be compensated by bank system in the Stock Exchange market. One of conditions of listing both on conducting world exchange platforms, and on Russian stock exchanges is introduction in the companies of modem standards of corporate management. Unfortunately, these standards in the domestic companies took root rather slowly and fragmentary, therefore much of them should be faced with the given problem at passage of listing.

Among the Russian companies it is possible to allocate leaders in the field of corporate management are the largest public companies which shares are placed in the Russian and foreign stock exchanges markets. Frequently these companies have the state in structure of shareholders. In the large not public and middle companies the degree of observance of standards of corporate management is determined by the basic shareholder. Before the majority of the companies questions of corporate management do not stand yet in the agenda as they "are still young" also proprietors directly participate in operative management. 

Development of practice of corporate management is subordinated to the following tendencies: a withdrawal of proprietors from management, occurrence of new shareholders and strategy of the company in the field of attraction of financing. In practice of corporate management of the Russian companies in conditions of crisis were planned the tendencies testifying to more pragmatic approach to questions of corporate management.

Thus, before crisis many companies had not time to generate appropriate system of corporate management to create working board of directors, to pick up strong hired managers.

Measures on improvement of disclosing of the information, in particular, on preparation of annual reports were accepted according to the international standards [7-11, 17-19].

Features of corporate management in Republic of Kazakhstan

The corporate sector including the large industrial and industrial trading joint-stock enterprises, financial and industrial groups, the holding and transnational companies was formed in the processes of market transformations of institutional and integration tendencies in Kazakhstan which all in the greater degree determine the leading part in maintenance of economic growth of the country.

Distinctive attributes of corporate management system in Kazakhstan are the following:

• Recently high in comparison with world practice a share of managers at the large enterprises;
• Recently low share of banks and others financial institutional investors;
• Actually, there is no such national group of institutional investors, as the pension, joint-stock funds being the major subjects of the market in the developed countries;
• Undeveloped securities market provides low liquidity of shares of the majority of the enterprises and impossibility of attraction of investments from sphere of small business;
• Оn the other hand, absence of the advanced securities market reduces a urgency of maintenance for the enterprises of worthy reputation in the market and a transparency of the information;
• In many cases of the relation with creditors or shareholders relations are more important than with proprietors for managers;
• The major feature there is "opacity" of relations of the property: characters of a privatization and the post-privatization period have resulted to actually impossible to carry out precise border between the real and nominal

Among the important factors which to influence for formation of national model of corporate management, it is necessary to allocate:

• Structure of possession of shares in corporations;
• Specificity of a financial system as mechanism of transformation of savings in the investment (types and distribution of financial contracts, a condition of the financial markets, types of financial institutions, a role of bank institutes);
• Ratio of sources of financing of corporation; macroeconomic and economic policy in the country;
• Political system (there is a number of the researches conducting direct parallels between the structure of political system " voters – parliament – the government " and model of corporate management " shareholders
• board of directors – managers ");
• A history of development and modern features of legal system and culture;
• The traditional (historically usual) national ideology; the usual practice of business relations;
• Traditions and a degree of intervention of the state in economy and its role in regulation of legal

In this connection, main principle of a state policy in the market of corporate securities should become increase of a regulating role of the state which should provide:

• Protection of investors against risk of the share market;
• Creation of conditions for attraction of the capital in the country;
• An establishment of stable rules on which the market will function;
• Performance) of the specified rules by all participants of a securities market [6, 12-19].

The system of corporate management of joint-stock company "KazMunayGas" based on respect of rights and legitimate interests of the unique shareholder and the key interested parties – the states, strategic partners, and workers of the company. There is the system of corporate management directed on reduction investment to risk, growth of investment appeal, decreasing cost of the loan capital and increase of value of the company. 

In 2010 agency Standard and Poor ` s has reconsidered a rating of corporate management of joint-stock company NK "KazMunayGas" up to GAMMA-4 +.

Joint-stock company NK " KazMunayGas", understanding importance and value of a rating of corporate management for development of the company, has taken into account all recommendations Standard and Poor and has developed the Plan of measures on elimination of remarks and recommendations.

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