In the challenging economic environment and amid rising competition, Chagala Group continues to achieve its sustainability targets twenty years since it was founded. Low oil prices and difficulties with the implementation of major oil and gas projects have led to a reduction in projects and staff but strong control over costs in management of our investments and continuous improvements in operating standards and business processes have allowed us to maintain strong EBITDA.
In 2016, Kurmangazy Development LLP, an investment of Chagala Group, completed the reconstruction and refurbishment of an office building in the city of Uralsk in Western Kazakhstan. The 5,600 sq. m. gross area building has been completely reconstructed into a Class A office destined to become the administrative office of the Karachaganak Petroleum Operating (KPO) consortium, one of the largest companies involved in the development of gas condensate fields in Kazakhstan. It was an honor to be part of this historical moment that so many have been waiting in Uralsk: the first step of the move of KPO into the city of Uralsk. We remain grateful to client and partners and the trust deposited on the Group. We are linked by many years of successful partnership with the developers of the Kashagan field and this new project is our first experience of cooperation with KPO, that we hope with continue in time for many years.
The year is also marked with the extension of the partnership of our investments with core clients. We feel privileged to not only continue, but strengthen this partnership with our investment’s core clients. I would like to thank our partners for their continued support and trust. Last year we renewed a substantial lease agreement with North Caspian Operations Company B.V. (“NCOC”) for the Chagala Centre Office in Atyrau.
Aside from general economic turbulence, the Group has also faced litigation. On 27 July 2016, TIPP Investments PCC filed a claim in the Commercial Division of the British Virgin Islands against the Company and its three current directors, with the date for the trial of this claim (estimated to last some fifteen days) has not yet been fixed but is likely to take place during the next financial year. Although the Directors are confident of the merits of their Defence, as with any litigation, the outcome of the case is uncertain.
But despite the challenges we face, Chagala Group remains committed to offering high quality solutions at a reasonable price, paying special attention to providing reliable service for our clients and creating the most comfortable conditions for work and life. By building long-term relations with our partners and catering to clients’ needs, we constantly improve the quality of our services. And I would like to thank our investments’ employees, clients and partners for their trust and dedication.
Looking ahead, we are determined to maintain the clarity of our direction. We will continue to focus our energy on maximizing our ever-expanding potential and maintaining our cutting-edge competitive advantage.
Chief Executive Officer