Queen’s Speech

Viscount Waverley Excerpts

Monday 13th May 2013 Lords Chamber

[Viscount Waverley]

My Lords, the gracious Speech emphasised the focus on building a stronger economy and that the first priority is to strengthen Britain’s economic competitiveness; this following recent remarks calling for greater productivity in the United Kingdom by, among others, the noble Lord, Lord Heseltine, who is not in his place.

There is, however, a substantial success story by UK companies in the oil and gas supply chain. According to trade information, exports related to that sector have grown for the 14th year in a row and are now worth £17.2 billion. Certainly, I can confirm in relation to activities in which I am engaged that UK supply chain-based companies have the highest number of individual companies supplying a high-priority export market—that of Kazakhstan.

However, we cannot afford to relax. Kazakhstan has been determined to be a priority export market by the United Kingdom and cannot be ignored. Leaders from other supply-chain countries are knocking on Kazakhstan’s doorstep. The German Chancellor has visited and now the French presidency has confirmed another state visit. I am in no doubt that to underpin the UK’s position requires a visit by the Prime Minister in helping to retain our position. No Prime Minister has visited Kazakhstan since independence in 1991, and yet it is where British interests, notably BG and Shell, are excelling.

I should declare that I chair the British Kazakhstan Parliamentary Group and the regional Central Asia Parliamentary Group and, for the record, have signed a co-operation agreement with opposite numbers in Astana that includes, among other initiatives, encouraging emphasis on increasing two-way investment and trade.

What can be done to consolidate our position as a lead player? Measures and mechanisms that increase co-operation agreements between those with the necessary technology to partner those in Kazakhstan, indeed in all new energy economies, is a process that stakeholders should embrace in a new world order. There is good pragmatic reason to do so, beyond economic. The importance of social and corporate responsibility on the part of investors and suppliers is paramount, and they have a moral and legal imperative to put this into practice. Foreign legislation is increasingly demanding it.

Helping to create a culture of legacy beyond investment, development and profits should be embraced as a norm that would protect the UK’s position, and for which recipient countries should encourage and reward. Employment creation creates an environment for stability. This enhances the confidence that protects the very investments necessary for the development of those national assets. The underlying challenge is to contribute to the strengthening of professional skills and the industrial base by maximising opportunities for local companies and citizens to benefit directly. This developing of indigenous capabilities, in partnership with the United Kingdom’s professionalism and experience, would become a winning formula.

In my capacity advising the national oil company, KazMunaiGas, I was given the task by the chairman, Mr Kiinov, to unify the fragmented approach towards local content development endeavours of the lead oil and gas operators, Kashagan, KPO, NCOC and Tengizchevroil, which include such partners as BG, Shell, Chevron, ExxonMobil and Total. I invited them to London to determine common ground and agree necessity in what we labelled the “London Process”, and which culminated after complex discussions in the signing of the Aktau Declaration a year later. Operators agreed a strategy and the content of a forward engagement plan with ministries, regulatory authorities and industry bodies concerned with local content development.

Delivery by stakeholders contains six key components: first, training and skills development with fast-track programmes to address critical skill shortages and longer-term skills capacity building; secondly, an industrial capacity register as a source of reference to identify current and potential capacity in the oil and gas sector and, importantly, the non-oil and gas sector; thirdly, harmonisation of standards, specification and code of practice; fourthly, enterprise development to stimulate the promotion, growth and new development of local companies, including access to management expertise and funding; fifthly, an inward investment programme to contribute to the commercial environment and identify opportunities to accelerate and expand domestic manufacturing and supply; and, sixthly and lastly, research and development to anchor specific technology development programmes to create new high-value business opportunities within domestic and regional markets.

The technical, commercial and socioeconomic challenges will take time, investment and commitment to develop, with huge challenges ahead. These priorities can be delivered in the United Kingdom’s national interest within existing contractual arrangements and international treaties with foresight, willingness, respect and innovation. The programme I have outlined can be developed further into a bilateral win-win.