Chevron-led joint venture approves $37bn project to boost production at Kazakh oil field

By bne IntelliNews July 7, 2016

Tengizchevroil LLP (TCO), jointly owned by Kazakhstan and a group of oil companies led by Chevron, announced on July 5 it got approval from its partners to move forward with a $36.8bn project to boost production at the Tengiz oil field in Kazakhstan. The first oil as a result of new expansion is expected in 2022.

Tengizchevroil shareholders and the Kazakh government have been in talks for the expansion of the project for years but the low price of oil has reduced the feasibility of the project. Low oil prices have made production at some Kazakh fields unprofitable and delays in production at the giant Kashagan field offered no opportunities for Kazakhstan to increase production except for the Tengiz field. With Kashagan expected to relaunch production in October 2016, the Kazakh government expects oil output to increase in the country from forecast 74mn tonnes to 75mn tonnes.

The Future Growth Project (FGP) will use sour gas injection technology, successfully developed and proven during TCO’s previous expansion in 2008, to increase Tengiz crude oil production capacity by about 12mn tonnes per year (260,000 barrels per day) to about 39mn tonnes per year (850,000 barrels per day), with peak rates exceeding 900,000 barrels of crude oil per day, TCO said in a statement. “This decision made by major international companies re-affirms that the Republic of Kazakhstan is a country with favourable business-climate where long-term investments can be made with confidence,” Energy Minister Kanat Bozumbayevas said. “We welcome the decision by TCO’s partners and hope for further cooperation to successfully execute the project.”

“TCO is confident that these world-class projects will build on our long partnership with Kazakhstan to deliver stable, reliable Tengiz production to benefit the future generations of Kazakhstan,” TCO General Director Ted Etchison said.

The expansion project will generate approximately 20,000 jobs during peak construction.

TCO was formed in April 1993 between the Republic of Kazakhstan and Chevron Corporation. Currently the company is 50% owned by Chevron Overseas Company, ExxonMobil holds a 25% stake and Kazakh state oil and gas company KazMunayGas controls 20%. LUKARCO BV owns the remaining 5%.

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