Task
The shareholders of the machine-building plant planned a project to expand the production of oilfield equipment and applied for concessional long-term financing to the Development Bank of Kazakhstan. To justify the investment project, it was required to fulfill the conditions of the bank and conduct an independent assessment of the marketing risks of the project.
Due to the specifics of the oil and gas industry, contracts for prospective deliveries of only products planned for production cannot be signed in advance. This has become the main obstacle for the plant in justifying its competitiveness with manufacturers from China and Russia, as well as in protecting the feasibility of production and sales plans.
See Opportunities
IGM has been an accredited expert of the Development Bank of Kazakhstan for over 10 years, and we have applied the accumulated rich experience and connections to find a solution. After extensive consultations with international experts in the field of mechanical engineering for the needs of the oil and gas industry, the key factors that determine the success of the enterprise were identified, which could be emphasized in justifying and reducing the risks of an investment project.
Solutions
IGM consultants assisted the plant's project team in systematizing the available information and documents characterizing the specifics of production and interaction schemes with customers in the oil and gas sector. It was found that while customers such as Chevron are favored by the world's leading players in the oilfield services industry, the latter are considering placing production orders at local facilities that meet their stringent requirements and industry standards.
Based on the facts, a preliminary map of the marketing risks of the investment project was developed with a breakdown of the degree of influence and an indication of the possibility of reducing them. Investment feasibility study prepared.
Satisfaction of new products with world standards adopted in the oil and gas industry was in the first place during the implementation of the production expansion project. Marketing studies of the prospects for market expansion were carried out, the logistics costs of competing enterprises were calculated, expert opinions were collected, risk management plans were developed and a rationale for reducing their impact was formulated.
Results
The management of the plant, with the participation of IGM, has achieved outstanding results in protecting the investment project. Demonstrated a high level of risk management and built a convincing strategy to minimize them. Based on the results of an internal examination, the Development Bank of Kazakhstan made a positive decision and financed the project in the amount of over USD 32.0 million for a period of 14 years.